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Imagine that you encounter stock B in the figure below a. Would you buy it? Why or why not? Explain your reasoning. b. Can you

Imagine that you encounter stock B in the figure below

image text in transcribed

a. Would you buy it? Why or why not? Explain your reasoning.

b. Can you get a better return in an alternate investment with the same market risk? Yes

or no? Explain. If your answer is yes, explain what would be such investment. (Assume

that there is no other stock in the market with the same market risk)

Security market line Market portfolio Em Expected return Stock B 71 Stock A 0 0.5 1.5 1.0 Beta

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