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Suppose the risk-free is 5 %, the average investor has a risk aversion co-efficient of...

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Accounting

Suppose the risk-free is 5 %, the average investor has a risk aversion co-efficient of A = 2, and the standard deviation of the market portfolio is 20 %. What is the equilibrium value of the market risk premium? What is the expected return on the market? If the average degree of risk aversion were 3, what would be the market risk premium, and expected return?

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