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    Financial Management Principles and Applications Study Set 2
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    Exam 8: Risk and Return-Capital Market Theory
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    Asset a Has a Required Return of 18% and a Beta
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Asset a Has a Required Return of 18% and a Beta

Question 80

Question 80

Essay

Asset A has a required return of 18% and a beta of 1.4. The expected market return is 14%. What is the risk-free rate? Plot the security market line.

Correct Answer:

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K = Krf + (Km - Krf)b
18% = X ...

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