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Expected return on market portfolio

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Mr. Edward is considering purchasing stock of PQR Company. He expects PQR to earn a return of 16%. PQR's beta is 1.4, risk-free rate is 8% and expected return on market portfolio is 14%. Should Mr. Edward purchase the stock of PQR company? Explain why. (You must show all necessary workings to support your answer)

Reference no: EM132999554

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