D. 20.4%
Expected return = Risk-free rate + Beta(Expected return on market - Risk-free rate)
Expected return = 6% + 1.6(15% - 6%)
Expected return = 20.4%
A stock has a beta of 1.6, the expected return on the market is 15 percent,...
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A stock has a beta of 1.25, the expected return on the market is 15 percent, and the risk-free rate is 4.60 percent. What must the expected return on this stock be? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Answer is complete but not entirely correct. Expected 13.50 % return 15
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