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The Two Factor Model on a Share Provides a Risk

Question 2

Multiple Choice

The two factor model on a share provides a risk premium for exposure to market risk of 9%, a risk premium for exposure to interest rate of (-1.3%) , and a risk-free rate of 3.5%. What is the expected return on the share?


A) 8.7%
B) 11.2%
C) 13.8%
D) 15.2%

Correct Answer:

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