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Suppose the yield on short-term government securities (perceived to be risk-free) is about 5%. Suppose also that the expected return required by the market for
Suppose the yield on short-term government securities (perceived to be risk-free) is about 5%. Suppose also that the expected return required by the market for a portfolio with a beta of 1 is 8.0%. According to the capital asset pricing model:
What would be the expected return on a zero-beta stock? (Enter your answer as a decimal rounded to 3 decimal places.)
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