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The following three stocks are available in the market:E ( R ) Stock A 1 0 . 5 % 1 . 2 0 Stock B

The following three stocks are available in the market:E(R)Stock A10.5%1.20Stock B13.0.98Stock C15.71.37Market14.21.00Assume the market model is valid.a. Write the market model equation for each stock.b. What is the return on a portfolio with weights of 30 percent Stock A,45 percent Stock B, and 25 percent Stock C?c. Suppose the return on the market is 15 percent and there are no unsystematic surprises in the returns. What is the return on each stock? What is the return on the portfolio?
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