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Market required return is subtracted from risk free rate which is...

This question belongs to Commerce Financial Management
Financial Management
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Market required return is subtracted from risk free rate which is used to calculate

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Correct Answer: Option B
Market required return is subtracted from risk free rate which is used to calculate market risk premium. The market risk premium is the difference between the expected return on a market portfolio and the risk-free rate. The market risk premium is equal to the slope of the security market line (SML), a graphical representation of the capital asset pricing model (CAPM).
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