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Assuming a Risk-Free Rate of 8 Percent and a Market

Question 187

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Assuming a risk-free rate of 8 percent and a market return of 12 percent, would a wise investor acquire a security with a beta of 1.5 and a rate of return of 14 percent given the facts above?

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r = RF + b(rm - RF)
= 0.08 + 1.5(...

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