2. From the market prices, we know the following two premiums: E(rM) - E(rA) = 0.4 and E(rA) - rf = 0.1. Suppose that asset
2. From the market prices, we know the following two premiums: E(rM) - E(rA) = 0.4 and E(rA) - rf = 0.1. Suppose that asset A is fairly priced according to CAPM. (a) Calculate BA. (b) If security B has BB = 1 and the market prices imply that E(rB) - rf = 0.5. What is aB
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