Market Model The following three stocks are available in the market: E(R) ???? Stock A 10.5% 1.20

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Market Model The following three stocks are available in the market:

E(R) ????

Stock A 10.5% 1.20 Stock B 13.0 .98 Stock C 15.7 1.37 Market 14.2 1.00 Assume the market model is valid.

a. Write the market model equation for each stock.

b. What is the return on a portfolio with weights of 30 percent Stock A , 45 percent Stock B , and 25 percent Stock C ?

c. Suppose the return on the market is 15 percent and there are no unsystematic surprises in the returns. What is the return on each stock? What is the return on the portfolio?

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Corporate Finance With Connect Access Card

ISBN: 978-1259672484

10th Edition

Authors: Stephen Ross ,Randolph Westerfield ,Jeffrey Jaffe

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Question Posted: Jul 09, 2024 09:02 AM

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Market Model The following three stocks are available in the market: E(R) ???? Stock A 10.5% 1.20

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Corporate Finance With Connect Access Card

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