Question: 3. Given the following information, Rp = .06, RM = .12, om = .15, answer the following questions assuming the CAPM is true. 1 (a)

3. Given the following information, Rp = .06, RM = .12,

3. Given the following information, Rp = .06, RM = .12, om = .15, answer the following questions assuming the CAPM is true. 1 (a) What is the numerical value of the market risk premium? (b) What is the equilibrium expected return on a risky asset with a of 1.2? With a of .6? (c) What is the of a security with an equilibrium expected return of .03? (d) Is it possible in equilibrium for the expected return on a security whose return has positive variance security to be less than the risk-free rate

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