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Problem 6-3 CAPM (Show formula) Suppose the risk-free rate is 4% and the market risk premium is 8%. What is the required rate of return

Problem 6-3 CAPM

(Show formula)

Suppose the risk-free rate is 4% and the market risk premium is 8%.

What is the required rate of return on (1) the market, (2) a stock with a beta of .8, and (3) a stock with a beta of 1.8?

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