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King Farm Manufacturing Company’s common stock has a beta of 2.00. If the risk-free rate is...

King Farm Manufacturing Company’s common stock has a beta of 2.00. If the risk-free rate is 3.71 percent, and the market return is 5.21 percent, calculate the required return on King Farm Manufacturing’s common stock.

Round the answers to two decimal places in percentage form.

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Answer #1

Required return=risk free rate+beta*(market rate-risk free rate)

=3.71+2*(5.21-3.71)

which is equal to

=6.71%

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