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7. Suppose the market premium is 9%, market risk (or volatility) is 30% and the risk-free rate is 3%. (a) What is the equation of

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7. Suppose the market premium is 9%, market risk (or volatility) is 30% and the risk-free rate is 3%. (a) What is the equation of the CAPM? Explain each component (b) Suppose a security has a beta of 0.6. According to the CAPM, what is its expected return? Explain

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