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Molly has half of her available funds invested in Stock X. Its expected return based on the CAPM is 11%. Assuming a risk-free rate of
Molly has half of her available funds invested in Stock X. Its expected return based on the CAPM is 11%. Assuming a risk-free rate of 3% and market risk premium (expected market return minus risk-free rate) of 15%, if Molly wants to achieve a portfolio with return equal to the market, she needs to invest the remaining half of her funds in a stock with a beta equal to
A) 0.53
B) 1.27
C) 0.47
D) 1.47
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