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The market portfolio (M) has the expected rate of return E(rM) = 0.12. Security A is in the market portfolio. We know E(rA) = 0.17

The market portfolio (M) has the expected rate of return E(rM) = 0.12. Security A is in the market portfolio. We know E(rA) = 0.17 and A = 1.5. (a) What is the rate of return of the risk-free asset (rf )? A new security (B) is introduced to the market. B = 0.8. Then what is fair expected rate of return of security B?

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