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3. Suppose the return of asset i is given by R = a + BiRm +X, where Ri is the return on asset i, a

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3. Suppose the return of asset i is given by R = a + BiRm +X, where Ri is the return on asset i, a is the return on the risk-free asset, Rm is the return on the market portfolio which represents the market risk, and X represents an individual risk peculiar to the characteristics of asset i, Assume 0

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