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Given a risk-free rate of 4%, a market rate of 16%, and a beta of 0.8,...

  • Given a risk-free rate of 4%, a market rate of 16%, and a beta of 0.8, find required rate of return and graph the Security Market Line.
  • Later, assume inflation decreases by 1% and beta increases to 1.4. Graph on same graph as above, and explain the changes.
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