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Stock A and Stock B's stock prices and dividends, along with the Dhaka Stock Exchange (DSE) Index, are shown here for the period 2017-2022. The
Stock A and Stock B's stock prices and dividends, along with the Dhaka Stock Exchange (DSE) Index, are shown here for the period 2017-2022. The DSE Index data are adjusted to include dividends. Data, as given in the problem, are shown below: Question: The risk-free rate on long-term Treasury bonds is 6.79%. Assume that the market risk premium is 5%. What is the expected return on the market? Now use the SML equation to calculate the two companies' required returns.|
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