A
AcadiFi
Capital Market ExpectationsMedium

An analyst uses the CAPM to set CMEs. She estimates that an asset class has a beta of 0.7 during expansions and 1.4 during recessions. The expected market return is 11% in expansions and 3% in recessions. The risk-free rate is 2.5%. Expansions occur 60% of the time. The unconditional expected return for this asset class is closest to: