Stock A has a beta of .5, and investors expect it to return 5%. Stock B has

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Stock A has a beta of .5, and investors expect it to return 5%. Stock B has a beta of 1.5, and investors expect it to return 13%. Use the CAPM to find the market risk premium and the expected rate of return on the market.

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Fundamentals of Corporate Finance

ISBN: 978-0077861629

8th edition

Authors: Richard Brealey, Stewart Myers, Alan Marcus

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Question Posted: Jun 30, 2016 09:23 AM

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Stock A has a beta of .5, and investors expect it to return 5%. Stock B has

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