To find the forecasted return, we need to understand the relationship between the actual return, the required return, and the forecasted return in the context of the Capital Asset Pricing Model (CAPM).

The CAPM helps determine the required return based on the stock's risk relative to the market. However, it does not directly give us the forecasted return, but we can infer it based on the difference between the actual return and the required return.

Here’s how we approach it:

1. Actual Return: The return Jack realized on the stock, which is negative 6% (−6%).
2. Required Return: The return expected based on the CAPM model, which is 1% (+1%).

To calculate the forecasted return, we can follow the relationship:

$\text{Forecasted Return} = \text{Actual Return} - (\text{Required Return} - \text{Market Return})$

Since we don't have the market return in this case, we typically assume the forecasted return will be the same as the actual return, unless the stock's performance deviates from market expectations. Here, since the stock performed worse than the expected return (−6% vs. +1%), the forecasted return would likely fall in line with this underperformance.

Thus, the forecasted return would be negative and aligned with the deviation from the required return. The closest answer, based on this, is:

a. Negative 7 percent.

Would you like further explanation on the CAPM model, or any additional questions?

Here are 5 related questions you may find helpful:

1. What factors affect the stock's required return in the CAPM model?
2. How do changes in market conditions affect the forecasted return?
3. What is the difference between required return and expected return?
4. How does risk-free rate influence the CAPM model?
5. What are the limitations of the CAPM model in forecasting stock returns?

Tip: The CAPM is useful for determining expected returns based on systematic risk, but it assumes a perfect market, which doesn't always hold in real-world situations.