You are considering buying stock in a new train scheduling company called Peaka-Choo-Choos Inc (ticker: PIKA). If PIKA has a beta of 1.7, the market rate of interest is 12%, the risk-free rate is 3%, and PIKA has earned 6% per year in the past, what return should you expect PIKA to pay? (Enter your answer in decimal format e.g. if your answer is 7.68%, enter 0.768 for your answer.
expected return= risk-free rate +Beta*(market rate- risk-free rate )
=3+1.7*(12-3)
which is equal to
=0.183
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