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You have the following forecasts: Return on a stock with a beta of .7 = 13% Risk-free rate = 4% Rate of return on the

You have the following forecasts:

  • Return on a stock with a beta of .7 = 13%
  • Risk-free rate = 4%
  • Rate of return on the market portfolio = 25%

If the CAPM is valid, should you invest in this fund? Explain why or why not.

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