Risk-free rate is 4%. The expected market return is 12%. Suppose beta = 1.2. What is...

Question

Question

Risk-free rate is 4%. The expected market return is 12%. Suppose beta = 1.2. What is the expected return of the stock?

Answer 1

Answer #1

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

=4+1.2*(12-4)

which is equal to

=13.6%

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Answer 2

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