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Suppose the current risk-free is 7.6 percent. P Inc. stock has a beta of 1.7 and an expected return of 16.7 percent. (Assume the CAPM

Suppose the current risk-free is 7.6 percent. P Inc. stock has a beta of 1.7 and an expected return of 16.7 percent. (Assume the CAPM is true)

a. What is the risk premium on the market? (2 marks)

b. M Industries stock has a beta of 1.8. What is the expected return on the M stock? (2 marks)

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