Suppose the CAPM equilibrium holds perfectly. Then the risk-free interest rate increases, and nothing else changes. a.

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Suppose the CAPM equilibrium holds perfectly. Then the risk-free interest rate increases, and nothing else changes.

a. Is the market portfolio still efficient?

b. If your answer to part a is yes, explain why. If not, describe which stocks would be buying opportunities and which stocks would be selling opportunities AppendixLO1

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Corporate Finance The Core

ISBN: 9781292431611

5th Global Edition

Authors: Jonathan Berk, Peter DeMarzo

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