Stock A has a beta of 1.8 and an expected return of 20 percent. Stock B has
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Stock A has a beta of 1.8 and an expected return of 20 percent. Stock B has a beta of 1.2 and an expected return of 14 percent. If CAPM holds, what should the return on the market and the risk-free rate be?
34.(LO9.3) The expected return on stock A is 15 percent. The expected return on stock B is 9 percent. Assuming CAPM holds, if the beta of stock A is higher than the beta of stock B by 0.4, what should the risk premium be?
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