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Assume, RPM = Market risk premium, rm=required rate of return on market portfolio trp=risk-free rate of return. Market risk premium is: RPM =TM - TRF

Assume, RPM = Market risk premium, rm=required rate of return on market portfolio trp=risk-free rate of return. Market risk premium is: RPM =TM - TRF Ori=rre +Bi (RPM) Or;=rRf + Bi (rm - PRF) RPM = TM + TRF

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