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. Company ABC trades in the stock market. Its β = 1. The market portfolio return...

. Company ABC trades in the stock market. Its β = 1. The market portfolio return is 12%. What is the expected return on company’s stock?

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Answer #1

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

Hence since Beta=1;the expected return would be equal to the market rate;

which is equal to

=12%

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