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Here are data on two companies. The T-bill rate is 4% and the market risk premium is 6%. Company Discount store Every Discount Forecasted return
Here are data on two companies. The T-bill rate is 4% and the market risk premium is 6%.
Company Discount store Every Discount
Forecasted return 12% 11%
Std deviation of returns 8% 10%
Beta 1.5 1
What would be the fair return for each company, according to the capital asset pricing model (CAPM)?
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