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The Treasury bill rate (i.e. risk-free rate) is 2%, and the expected return on the market portfolio is 14.5%. Using the capital asset pricing model:
The Treasury bill rate (i.e. risk-free rate) is 2%, and the expected return on the market portfolio is 14.5%. Using the capital asset pricing model: a. What is the risk premium on the market? b. What is the required rate of return on an investment with a beta of 1.2? c. If an investment with a beta of 0.80 offers an expected return of 13%, does it have a positive NPV? Explain
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