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Assume that the risk-free rate of interest is 6% and the expected rate of return on the market is 16%. A stock has an expected
Assume that the risk-free rate of interest is 6% and the expected rate of return on the market is 16%. A stock has an expected rate of return of 4%. What is its beta? Why would anyone consider buying this risky asset which provides an expected return less than the risk-free rate?
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