Suppose there are two independent economic factors, M1 and M2. The risk-free rate is 7%. Portfolios A

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Suppose there are two independent economic factors, M1 and M2. The risk-free rate is 7%. Portfolios A and B are both well diversified.

Portfolio Beta on M1 Beta on M2 Expected Return

A 1.8 2.1 40%

B 2.0 -0.5 10%

What is the risk premium for M1?

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Essentials of Investments

ISBN: 978-0077835422

10th edition

Authors: Zvi Bodie, Alex Kane, Alan J. Marcus

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Posted Date: Mar 08, 2024 05:17 AM

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Suppose there are two independent economic factors, M1 and M2. The risk-free rate is 7%. Portfolios A

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To calculate the risk premium for economic factor M1 we need to use the Capital ... View the full answer

Essentials of Investments

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