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Calculate the required rate of return on alternative

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Reference no: EM132602365

1. Assumes that the risk-free rate is 3.0%, and risk premium is expected return on market portfolio less risk.

a. Write out the security market line (SML) equation; use it to calculate the required rate of return on each alternative?

b. How do the expected rates of return compare with the required rates of return? Identify the undervalued companies?

Reference no: EM132602365

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