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Assume the real rate of return on economy is 3%, the expected inflation is 4%. Answer the following questions: A. Calculate risk free rate. B.

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Assume the real rate of return on economy is 3%, the expected inflation is 4%. Answer the following questions: A. Calculate risk free rate. B. If market risk premium is 6% calculate expected rate of return to market. C. Joy Company has a beta of 1.5, calculate the required rate of return for Joy's stock. D. Draw the security market line and calculate the slope of the SML, and show the location of Joy stock on the line by an X. E. If inflation goes up from 4% to 5% calculate the required rate of return for Joy's stock

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