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6. If, as a result of the disruption caused by the Covid-19 pandemic, the share market return in 2020 turns out to be -20%, explain

6. If, as a result of the disruption caused by the Covid-19 pandemic, the share market return in 2020 turns out to be -20%, explain what will happen if we use an historical average to estimate the expected market risk premium next year. Discuss whether this makes sense and what we should do about it. (6 marks)

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