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You have the following information on two firms, A and B. The market rate of return is 6% and the risk-free rate of return is

You have the following information on two firms, A and B. The market rate of return is 6% and the risk-free rate of return is 1 %.

Firm As Beta is 2. Firm Bs Beta is 1. A. Find the required return to equity for each firm, based on the Capital Market Pricing Model. B. Find the overall market equity premium. C. In what sense is Firm A more risky than Firm B?

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