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Suppose the market premium is 9%, market volatility is 30% and the risk-free rate is 3%. (a) What is the equation of the SML? (b)
Suppose the market premium is 9%, market volatility is 30% and the risk-free rate is 3%. (a) What is the equation of the SML? (b) Suppose a security has a beta of 0.6. According to the CAPM, what is its expected return? (c) A security has a volatility of 60% and a correlation with the market portfolio of 25%. According to the CAPM, what is its expected return? (d) A security has a volatility of 80% and a correlation with the market portfolio of 25%. According to the CAPM, what is its expected return
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