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3 Make-Up Masters stock has a beta of 1.8; the risk free rate is 3% and the market risk premium is 7%. What is the required r
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Answer #1

Based on CAPM,

Expected return on stock = Risk free rate + Beta * Marker risk premium

Expected return on stock = 3% + 1.8 * 7%

Expected return on stock = 3% + 12.6% = 15.60%

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