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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

  • 11.42 percent

  • 9.78 percent

  • 10.35 percent

  • 6.37 percent

  • 11.01 percent

  • 9.99 percent

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