Stock A has a beta of 1.47 while stock B has a beta of 1.08 and an expected return of 13.2 percent. What is the expected return on stock A if the risk-free rate is 4.5 percent and both stocks have equal reward-to-risk premiums?
A) 12.12 percent
B) 15.07 percent
C) 16.34 percent
D) 16.89 percent
E) 17.78 percent
Correct Answer:
Verified
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