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Shares in a Company Are Perfectly Correlated with the Market

Question 12

Multiple Choice

Shares in a company are perfectly correlated with the market return. The risk free rate of return is 5 per cent and the risk premium is 6 per cent. What is the expected return?


A) 30%
B) 11%
C) 1%
D) 1.2%

Correct Answer:

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