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Does the capm hold

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Reference no: EM133104143

Question - Inan economy where the return of the market is expected to be 13% for the next period, the expected returns and betas of two stocks are given below:

Security

Return

Beta

A

11%

0.7

B

18%

1.5

Required - Does the CAPM hold? If yes, how can you tell? If not, describe an appropriate arbitrage strategy.

Reference no: EM133104143

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