Expected and required returns
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Risk free rate of 7% and market risk premium of 2 %. The best investment of these:
Expected Return of 9.01 / Beta 1.70
Expected Return of 7.06 / Beta 0.00
Expected Return of 5.04 / Beta -0.67
Expected Return of 8.74 / Beta 0.87
Expected Return of 11.50 / Beta 2.50
The 7.06 with Beta of 0.00 is best, but how do I calculate to find this that this is the best?
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In just four sentences, the solution provides explanations as well as answers on expected and required returns and beta.
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Risk free rate of 7% and market risk premium of 2 %. The best investment of these:
We compare the investments as follows
Expected Return of 9.01 / Beta 1.70 = 9.01/1.70= 8.42
Expected Return of ...
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