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Suppose you observe the following situation: Security Beta Expected Return A 1.16 .1137 B .92 .0984 Assume these securities are correctly priced. Based on the
Suppose you observe the following situation:
Security | Beta | Expected Return |
A | 1.16 | .1137 |
B | .92 | .0984 |
Assume these securities are correctly priced. Based on the CAPM, what is the market risk premium?
Multiple Choice
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11.42 percent
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9.78 percent
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10.35 percent
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6.37 percent
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11.01 percent
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9.99 percent
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