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Unformatted text preview: as the: Answer total return. systematic premium. unsystematic return. market risk premium. The intercept of the security market line is: Answer E(Rm)  Rf 1/(E(Rm)  Rf) Rf  E(Rm) Rf what is the expected return given the following economic scenarios: (Recession Probability = 40%, Return = 25%) (Expansion Probability = 25%, Return = 20%) (Boom Probability = 35%, Return = 45%) ? Answer 10.75% 13.00% 16.00% 17.75% The beta of the riskfree asset is: Answer 1.0 0.0 0.5 1.0 The CAPM (capital asset pricing model) assumes that: Answer all assets can be traded investors are riskaverse investors have homogeneous expectations all of the above...
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This note was uploaded on 06/23/2011 for the course BUS 2B taught by Professor Hayle during the Spring '11 term at El Camino.
 Spring '11
 Hayle
 Accounting

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