The riskless return is currently 6%, and Chicago Gear has estimated the contingent return given here
A. Calculate the expected returns on the stock market and on the Chicago Gear Stock.
B. What is Chicago Gear Beta.
C. What is Chicago Gears required return according to the CAPM:
State of the Market Probability that state occurs Stock Market Chicago Gear
Stagnant .2 -10% -15%
Slow Growth .35 10% 15
Average Growth .3 15 25
Rapid Growth .15 25 35