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19 August, 15:35

Carolina insurance company, an all-equity life insurance firm, is considering the purchase of a fire insurance company. the fire insurance company is expected to generate a return of 20 percent with a beta of 2.5. if the risk-free rate is 8 percent and the market risk premium is 6 percent, the expected return from the insurance company is

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  1. 19 August, 15:38
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    23% or 8 + 2.5 (6) using CAPM
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