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A stock has a beta of 1.8, the expected return on the market is 5 percent,...

A stock has a beta of 1.8, the expected return on the market is 5 percent, and the risk-free rate is 2 percent. What must the expected return on this stock be?

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Answer #1

Formula for expected return; Expected return = Risk free rate + Beta*(market rate - Risk free rate) Here Risk free rate = 2%

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