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Two stocks both plot on the Security Market Line (SML). This means that they are correctly priced using the Capital Asset Pricing Model (CAPM) and

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Two stocks both plot on the Security Market Line (SML). This means that they are correctly priced using the Capital Asset Pricing Model (CAPM) and offer investors the same reward to risk ratio (the slope of the SML). Stock A has a beta of 1.5 and an expected return of 15%. Stock B has a beta of 0.5 and an expected return of 7%. The risk-free rate is: Enter as decimal format, not as a percentage. Round to 2 decimals. Enter numbers only do not use symbols

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