What is the risk-premium on the market

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The Treasury-Bill rate is 5 percent, and the expected return on the market portfolio is 12%. On the basis of the Capital Asset Pricing Model:

(i) Draw the SNEL. What is the risk-premium on the market?

(ii) What is the required return on an investment with a beta of 1.5?

(iii) If an investment with a beta of 0.8 offers an expected return of 9.8 percent, is it overpriced or underprieed'?

(iv) If the market expects a return of 11.2 percent from Stock X, what is its beta?

Reference no: EM133116375

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