You hear on the news that the S&P 500 was down 2% today relative to the risk-free rate (the market’s excess return was ). You are thinking about your portfolioand your investments in Apple and Procter & Gamble.
a. If Apple’s beta is 1.4, what is your best guess as to Apple’s excess return today?
b. If Procter & Gamble’s beta is 0.4, what is your best guess as to P&G’s excess