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Hi sir
Please I don’t understand why my answer 9.5% is different.Equity beta 1.3 . The markets premium is 8% and the risk free rate 3%.
According to the formula,it should be
3% +1.3(8% -3%)Why the answer ignore the second risk free rate.
ThanksThe question gives the market premium. This is the excess of the market return over the risk free rate. (So the market return is really 11%)
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