Market risk premium and CAPM

| January 31, 2015
Currently in the market, the risk-free rate is 6% and the market risk premium [E(RM) – RF] is 5%. Based on this information, which of the following statements is most correct? Assume that CAPM is correct.

A If a stock has a negative beta, its required return must also be negative.

b. If a stock&…

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Constant growth model and CAPM
CAPM, Required rate of return on stock, risk premium on the market.

Category: Coursework, critical Thinking

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