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1. (Required Rate of Return using CAPM): a. Calculate a fair rate of return for XYZ shares, which have a Beta of 1.2. The risk-free

1. (Required Rate of Return using CAPM):

a. Calculate a fair rate of return for XYZ shares, which have a Beta of 1.2. The risk-free rate is 6%, the market portfolio (New York Stock Exchange stocks) has an expected return of 16%. b. Why is the rate you determined a fair rate?

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