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A Stock's Beta Is Estimated to Be 1

Question 39

Multiple Choice

A stock's beta is estimated to be 1.3. The risk-free rate is 5 percent, and the market return is expected to be 9 percent. What is the expected return on the stock based on the CAPM?


A) 5.2 percent
B) 11.7 percent
C) 16.7 percent
D) 4 percent
E) 10.2 percent

Correct Answer:

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