Suppose the Treasury bill rate is 7 percent and the expected return on the market portfolio is 15 pe
Question: Suppose the Treasury bill rate is 7 percent and the expected return on the market
portfolio is 15 percent.
A. What is the risk premium on the market?
B. What is the required expected rate of return on an investment with a beta of 1.25?
C. If an investment with a beta of 1.5 offers an actual expected return of 20 percent, does
it have NPV > 0 adjusted for risk?
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