The (estimated) beta coefficient is the slope of the line of best fit
Rearranging our equation gives us
the Security Market Line (SML):
Suppose a stock had a $\beta$ of $0.74$. The expected market return is $12\%$ and the risk free rate is $4\%$. What is the expected return on the stock?
Suppose the expected return on the market were $11\%$, the risk free $4\%$, and the stock's expected return $15\%$. What is the stock's beta coefficient?