Steam Corp. has a beta of 1.5. The prevailing risk-free rate is 5 percent, and the annual market return in recent years has been 11 percent. Based on this information, the required rate of returnon Steam Corp. stock is ____ percent.
A) 21.5
B) 6.5
C) 16.5
D) 14
E) none of the above

Question

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The Answer of Steam Corp. has a beta of 1.5. The prevailing risk-free rate is 5 percent, and the annual market return in recent years has been 11 percent. Based on this information, the required rate of returnon Steam Corp. stock is ____ percent.
A) 21.5
B) 6.5
C) 16.5
D) 14
E) none of the above