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How to find the risk premium in two independent economic factors? For example: Suppose there are two independent economic factors, M4 and M2. The risk-free
How to find the risk premium in two independent economic factors?
For example:
Suppose there are two independent economic factors, M4 and M2. The risk-free rate is 7%, and all stocks have independent firm-specific components with a standard deviation of 50%. Portfolios A and B are both well diversified. Portfolio Beta on M, Beta on M Expected Return (%) 2.1 40 1.8 2.0 20.5 What is the expected return-beta relationship in this economyStep by Step Solution
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