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#1




SOA IFM sample question 15
Is it me or is SOA IFM sample question 15 erroneous?
It says the table is giving us the expected return and volatility for stocks X, Y and the market. Then the table column heading says we are getting the required return for stocks X, Y and the market. The problem then asks us to find the required return for stock Y, assuming CAPM holds. Isn't the required return = E[X]  risk_free_rate? In that case, the answer should be 2.52 and I don't need to find the risk free rate at all.
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#3




Assuming the CAPM holds, the expected return of a security is equal to the required return of a security. Thus, assuming the market is in the CAPM equilibrium, these two terms are often used interchangeably.
The risk premium of X (not the required return of X) is the expected return of X minus the riskfree rate. 
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