2. Norway Fiord Boat Company has a beta of 1.40. The risk-free rate is presently 8 percent,...

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2. Norway Fiord Boat Company has a beta of 1.40. The risk-free rate is presently 8 percent, and the inflation extension to the CAPM, Eq. (4-4), holds. The b coefficient in the equation is .075, and the i coefficient is .03. The inflation covariance/

variance ratio for the company is .25.

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