hello, can someone explain to me the question in practice exams book 1, Exam 3, afternoon session, question 84, why is the answer A and why is the formel for capm hier: E=rf+beta(Em)=20%, why not: E=rf+beta(Em-rf)??? thanks in advance!

the formula is correct as you have put it the second time, only we are given the expected market risk premium (rather than its component parts expected market return and risk free return). Computing gives us Estimate (from CAPM) required return is equal to projected return so it is fairly valued

that means, while Em risk premium is? ah ok, I found explanation on page 170, book 4. thanks a lot!!