Question
A stock with beta of 2.0 has an expected return of 22%. Another stock with a beta of 0.5 has an expected return of 7%.
A stock with beta of 2.0 has an expected return of 22%. Another stock with a beta of 0.5 has an expected return of 7%.
What should be the risk free rate if the SML relationship holds? Report the answer as a percentage without the % symbol.
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Fundamentals of Investments Valuation and Management
Authors: Bradford D. Jordan, Thomas W. Miller
5th edition
978-007728329, 9780073382357, 0077283295, 73382353, 978-0077283292
