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4. a. Suppose you forecast that the standard deviation of the market return will be 20% in the coming year. If the measure of risk

4. a. Suppose you forecast that the standard deviation of the market return will be 20% in the coming year. If the measure of risk aversion is A = 4. what would be a reasonable guess for the expected market risk premium? (15 marks) b. What value of A is consistent with a risk premium of 9%? c. What will happen to the risk premium if investors become more risk tolerant

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