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Assume that markets are efficient as defined in Chapter 12 of your book and that the Capital Asset Pricing Model (CAPM) holds. Further assume that
Assume that markets are efficient as defined in Chapter 12 of your book and that the Capital Asset Pricing Model (CAPM) holds. Further assume that the monthly rate of return on T-bills is 1% and that the market went up this month by 1.5%. In addition, Boomtown, Inc., which has a beta of 2, surprisingly just won a lawsuit that awards it $3 million immediately. Boomtown, Inc. is an all equity firm. If the original value of Boomtown Inc. equity were $100 million, what is the best estimate of the one month return on Boomtown stock was this month? The best estimate of the one month return on Boomtown stock this month is
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