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Mrs Moneybags goes to her financial advisor who offers her the following stocks: Stock Beta Expected Return Coca-Cola Co 0.92 9.88% JPMorgan Chase and Co

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Mrs Moneybags goes to her financial advisor who offers her the following stocks: Stock Beta Expected Return Coca-Cola Co 0.92 9.88% JPMorgan Chase and Co 1.13 11.65% Assume these securities are priced correctly by the market based on the Capital Asset Pricing Model. (a) What is the risk-free rate? (5 marks) (b) What is the expected return on the market? [2 marks]

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