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A stock has a beta of 0.95, the expected return on the market is 21 percent,...

A stock has a beta of 0.95, the expected return on the market is 21 percent, and the risk-free rate is 4.00 percent. What must the expected return on this stock be? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

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Answer #1

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Calculation of the Expected Return on this Stock:

  =Rf+beta (ERm-Rf)

  =4%+0.95(21%-4%)

Expected Return =20.15%

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