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Company X owns $55,000 of Alpha, Inc. stock that has a beta of 4.8. Company X also owns $20,000 of Deltas Company (beta = 2.6)

Company X owns $55,000 of Alpha, Inc. stock that has a beta of 4.8. Company X also owns $20,000 of Deltas Company (beta = 2.6) and $25,000 of Sigma (beta = 0.6). Assume that the market return will be 9 percent and the risk-free rate is 3 percent. 1. What is the market risk premium?

2. What is the risk premium of Alpha, Inc?

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