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1 . The following information is available on the percentage rates of return on various* assets under the three possible states of the world ,

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1 . The following information is available on the percentage rates of return on various* assets under the three possible states of the world , each of which has a probability of occurring of one third :" State !) 2 3 Share A - 6%/0 - 18 %/0 60% Share B 32%/0 - 22% 35% Market Portfolio 50% - 10% 20 % Risk - free Asset 10% 10%/ 10% i) What is the numerical equation for the Capital Market Line ( CML ) for the market ? 11 ) Do shares A and B lic on the CMIL , and what , if anything , do you conclude from* this ? i'll ) What are the beta values for share A and B ? iv ) Are the expected returns for shares A and B consistent with the Security Market* Line and , if not , what equilibrating changes would you expect to occur

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