Suppose you observe the following situation Return if State Occurs State of Probability Economy of...
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Suppose you observe the following situation Return if State Occurs State of Probability Economy of State Boom .17 Normal 72 Bust 11 Stock A --08 .13 50 Stock B -.05 .14 31 a. Calculate the expected return on each stock. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g.. 32.16.) b. Assuming the capital asset pricing model holds and Stock A's beta is greater than Stock B's beta by 15, what is the expected market risk premium? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Stock A Stock B b. Market risk premium % % %
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