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Suppose the risk-free rate of return is currently 5%, and expected market risk premium is 10%. Use this information to construct the security market line
Suppose the risk-free rate of return is currently 5%, and expected market risk premium is 10%. Use this information to construct the security market line on the diagram below. Suppose you observe two Asset A has an expected return of 14% with a beta = 0.6. Asset B has an expected return of 16% with a beta = 1.2. Describe the adjustment process for these assets predicted by the CAPM
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