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You have been scouring The Wall Street Journal looking for stocks that are good values and have calculated expected returns for five stocks. Assume the

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You have been scouring The Wall Street Journal looking for stocks that are good values and have calculated expected returns for five stocks. Assume the risk-free rate (RF) is 5 percent and the market risk premium (rM -RF) is 2.3 percent. Which security would be the best a. Expected Return = 9.01%, Beta = 2 b. Expected Return = 7.0696, Beta=0.5 c. Expected Return = 5.04%. Beta = -0.3 d. Expected Return = 8.74%. Beta = 0.3 e. Expected Return = 11.50%, Beta = 1.8 Oe ob According to pure expectations theory, the maturity risk premium is 2 O-1 OO 02 0 1

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