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Let = (r m - r f ) / m be the market risk price and * = (r m - r f ) /
Let = (rm - rf) / m be the market risk price and * = (rm - rf) / 2m = / m, where m is the standard deviation of market portfolio returns. If Pit is the price of stock i at times t = 0, 1, calculate the theoretical price Pio without subtracting the risk from the expected value E(Pi1).
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