Question: Consider the following variance-covariance matrix for Security A, Security B, and the Market: For the coming year, the Market Risk Premium is 5.5 percent and

Consider the following variance-covariance matrix for Security A, Security B, and the Market: For the coming year, the Market Risk Premium is 5.5 percent and the risk-free rate is 2.0 percent. Determine the required return for Security B using both the Capital Market Line and the Security Market Line (CAPM). What is the (absolute) difference between these two required returns? 16.875% 12.375% 20.625% 6.300% 7.700%

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