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M&B3 3rd Edition by Dean Croushore
Edition 3ISBN: 978-1285167961M&B3 3rd Edition by Dean Croushore
Edition 3ISBN: 978-1285167961 Exercise 7
Suppose that the CAPM is a good model of risk in the stock market. Suppose also that the average excess return on stocks is 10 percent and that the risk-free interest rate is 1 percent. What would you expect to be the return to stocks with each of the following beta coeffi cients
a _0.5
b 0.3
c 1.0
d 2.0
a _0.5
b 0.3
c 1.0
d 2.0
Explanation
Verified
Verified
Given the average excess return on stock...
M&B3 3rd Edition by Dean Croushore
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