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There are three stocks in the market: A, B, and C. The market betas for...

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Finance

  1. There are three stocks in the market: A, B, and C. The market betas for the three stocks are Beta(A) = 0.5, Beta(B) = 1.0, Beta(C) =1.5. The expected returns of the three stocks are E[R(A)] = 8%, E[R(B)] = 12%, and E[R(C)] = 17%. Based on these values, is there any violation of CAPM (i.e., are the betas and expected returns consistent with CAPM?)

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