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Company A had a beta of 0

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Company A had a beta of 0.6 and an expected return of 13%. Company B has a beta of 1.3 and an expected return of 23%. Both conpanies are believed to trade at a fair prices.

 

1. what is the risk free rate of return

Answer: 4.43%

 

2. what id the expected return on the market portfolio?

18.71%

9.26%

14.23%

20.16%