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Business, 29.06.2021 19:30 573589

Suppose the yield on short-term government securities (perceived to be risk-free) is about 6%. Suppose also that the expected return required by the market for a portfolio with a beta of 1 is 12.0%. According to the capital asset pricing model: a. What is the expected return on the market portfolio? (Round your answer to 1 decimal place.) b. What would be the expected return on a zero-beta stock? Suppose you consider buying a share of stock at a price of $85. The stock is expected to pay a dividend of $11 next year and to sell then for $88. The stock risk has been evaluated at β = –0.5. c-1. Using the SML, calculate the fair rate of return for a stock with a β = –0

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Suppose the yield on short-term government securities (perceived to be risk-free) is about 6%. Suppo...
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