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2 d ) The return on the risk - free asset is 5 % . You are given the following information: SecurityE ( R )
d The return on the riskfree asset is You are given the following information: SecurityERSDCorrelation with Market portfolioBetaFirm AFirm BFirm CMarket portfolio i What is the correlation between security A and the market portfolio?ii What is the standard deviation of security Biii What is the beta of security C Give an interpretation of its value.iv Is the stock of Firm A correctly priced according to the capital asset pricingmodel CAPM What about the stock of Firm C If these securities are notcorrectly priced, what is your investment recommendation for someone with awelldiversified portfolio?
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