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I am having trouble understanding Slide 34 in Chapter 13 (Elton).

The question is:

I understand you use the CAPM formula but I do not understand how you get the answer.

12% = Rf + 1.5(Rm-Rf) - I understand

6% = Rf + .5(Rm-Rf) - I understand

I do not understand that from here, you get to

So to get 6, you do 12-6, but how does that get you to the rF rate?

The question is:

**What is the expected return on an asset with a Beta of 2.0?**I understand you use the CAPM formula but I do not understand how you get the answer.

12% = Rf + 1.5(Rm-Rf) - I understand

6% = Rf + .5(Rm-Rf) - I understand

I do not understand that from here, you get to

**6%=(Rm-Rf)****-> rF = 3%**

So to get 6, you do 12-6, but how does that get you to the rF rate?

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