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Assum e the following two stocks are in equilibrium and the CAPM holds. Stock Rate of return % Beta K 16 1.5 L 20 2.0

Assume the following two stocks are in equilibrium and the CAPM holds.

Stock	Rate of return %	Beta
K	16	1.5
L	20	2.0

a) Solve for Rf and Rm and derive the CAPM equation.

b) Assume there is a stock J with return of 18% and beta of 1.6. Is J in equilibrium? Or is arbitrage possible? Show details.

plz try to solve whole question

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