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Suppose you forecast that the standard deviation of the market return will be 20% in the coming year. If the measure of risk aversion in
Suppose you forecast that the standard deviation of the market return will be 20% in the coming year. If the measure of risk aversion in A = E(r_M) - r_f/sigma_M^2 is A = 4. What would be a reasonable guess for the expected market risk premium? What value of A is consistent with a risk premium of 9%? (Round your answer to 2 decimal places. What will happen to the risk premium if investors become more risk tolerant
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