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Given the following data about the hypothetical company Pharma Care Inc Beta = 2.5 Mark Risk Premium 4.5% Expected Return on the Market Portfolio 8%

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Given the following data about the hypothetical company Pharma Care Inc Beta = 2.5 Mark Risk Premium 4.5% Expected Return on the Market Portfolio 8% a. Calculate the required retum using Capital Asset Pricing Model (CAPM) equation (3.5 marks) b. For this part only, if the number of the stocks increases, what will be the effect increase, decrease, remain same) on systematic risk? Briefly justify your answer. No cald (0.5.1 1.5 marks)

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