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a) Data for company X and Y are given below. The T-bill rate is 3.5% and the market risk premium is 8%. Company X 13%

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a) Data for company X and Y are given below. The T-bill rate is 3.5% and the market risk premium is 8%. Company X 13% Company Y 12% Company Forecasted return Standard deviation returns Beta of 9% 1.4 11% 0.9 What would be the fair return for each company according to the capital asset pricing model (CAPM)? [5 marks]

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