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Use the Security Market Line to Determine the Required Rate

Question 40

Multiple Choice

Use the security market line to determine the required rate of return for the following firm's stock.The firm has a beta of 1.05,the required return in the market place is 11.50%,the standard deviation of returns for the market portfolio is 20.00%,and the standard deviation of returns for your firm is also 20.00%.


A) 13.13%
B) 10.50%
C) 31.25%
D) There is not enough information to answer this question.

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