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Business, 27.05.2020 17:59 towlesam

The risk free rate is 2%, and the required return on the market is 8%. What is the required return on an asset with a beta of 1.2? What is the reward/risk ratio? What is the required return on a portfolio consisting of 80% of the asset with a beta of 1.2 and the rest in an asset with an average amount of systematic risk?4. Using the CAPM, show that the ratio of the risk premiums on the two assets in Question 3 is equal to the ratio of their betas.

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