Consider the following variance-covariance matrix for Security A, Security B, and the Market: Variance Covariance Matrix...
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Consider the following variance-covariance matrix for Security A, Security B, and the Market: Variance Covariance Matrix A B Market A 0.562500 0.091875 0.028125 0.091875 0.122500 0.021000 B Market 0.028125 0.021000 0.022500 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? O 12.375% O 6.300% O 7.700% O 20.625% O 16.875% Consider the following variance-covariance matrix for Security A, Security B, and the Market: Variance Covariance Matrix A B Market A 0.562500 0.091875 0.028125 0.091875 0.122500 0.021000 B Market 0.028125 0.021000 0.022500 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? O 12.375% O 6.300% O 7.700% O 20.625% O 16.875%
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