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Business, 23.10.2021 17:40 galarzachristopher

Assume the risk free rate equals Rf = 4%, and the return on the market portfolio has expectation E [RM] = 12% and standard deviation σM = 15%. (a) What is the equilibrium risk premium (that is, the excess return on the market portfolio)? (b) If a certain stock has a realized return of 14%, what can we say about the beta of this stock? (c) If a certain stock has an expected return of 14%, what can we say about the beta of this stock?

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Assume the risk free rate equals Rf = 4%, and the return on the market portfolio has expectation E [...
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