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2. Below is the information of two securities with their corresponding beta and expected return; security for the succeeding requirements, use the table below; Security

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2. Below is the information of two securities with their corresponding beta and expected return; security for the succeeding requirements, use the table below; Security Beta Expected Return 1.8 Cooley, Inc. Moyer Co. 22.00% 20.44% 1.6 a. If the risk free rate applied to Colley Inc is 7%, analyze, what will be the over-all market return. (3 marks) (2 marks correct process + 1 mark correct answer) b. If the same over-all market return derived in requirement (a) holds true and a 5% risk free rate was used, examine if Mayer Co. correctly price. If not, calculate the correct amount that it should be priced. (3 marks) (2marks correct process + 1 mark correct answer)

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