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

Question:

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.

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Corporate Finance

ISBN: 9780137845071

6th Edition

Authors: Jonathan Berk, Peter DeMarzo

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Question Posted: Jun 12, 2024 01:14 AM

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

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Corporate Finance

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