Answer:
[tex]CAPM=5.6\%[/tex]
Explanation:
as it is said we must apply the CAPM model, so we have:
[tex]CAPM=r_{f}+\beta (E\(r_{m})-r_{f} )[/tex]
where [tex]CAPM[/tex] is the capital asset pricing model, [tex]r_{f}[/tex] is the risk free of the market, [tex]\beta[/tex] is the relation between the market benchmark and an asset return, and [tex]E(r_{m})[/tex] is the expected return of an asset
[tex]CAPM=0.041+1.3(0.0525-0.041)[/tex]
[tex]CAPM=5.6\%[/tex]
