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Can anyone explain how Re is calculated in 1st part of solution ?
Is is right or wrong ?
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Correct in the question-
It will be Market risk premium =6%(Rm-Rf) and not market return 6%
So Re= Rf+(Rm-Rf)*Beta
Re=4+6*Beta
Now u put the values of Beta and will get Re
Any doubt feel free to ask!
Thank you so much !