Question: Assume that returns are generated as follows: Where C is the rate of change in interest rates. Derive a general equilibrium relationship for security returns.

Assume that returns are generated as follows:

R; = R; +a;(RM-RM)+b,(C-C)

Where C is the rate of change in interest rates. Derive a general equilibrium relationship for security returns.

R; = R; +a;(RM-RM)+b,(C-C)

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