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Assistance requested in calculating the answer to this practice question. Using the Capital Asset Pricing Model (CAPM), calculate the required return on a stock that has a beta of 1.65, when the mark

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Answer #1

According to the CAPM,

Required Return = Risk-free Rate + [Beta * Market Premium]

= 6% + [1.65 * 12%]

= 6% + 19.8%

= 25.8%

So, 4th option is correct.

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