The risk premium for exposure to exchange rates is 5% and the firm has a beta relative to exchanges rates of 0.4. The risk premium for exposure to the consumer price index is -6% and the firm has a beta relative to the CPI of 0.8. If the risk-free rate is 3.0%, what is the expected return on this share?
A) 0.2%
B) 1.5%
C) 3.6%
D) 4.0%
Correct Answer:
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