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Calculate the expected return on a stock with a beta of 1.19. The risk-free rate of...

Calculate the expected return on a stock with a beta of 1.19. The risk-free rate of return is 4% and the market portfolio has an expected return of 8%. (Enter your answer as a percentage. For example, enter 1.53% instead of .0153.

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Answer #1

Expected return = Risk-free rate of return + Beta(Market return - Risk-free rate of return)

Expected return = 0.04 + 1.19(0.08 - 0.04)

Expected return = 0.0876 or 8.76%

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