Elephant Company common stock has a beta of 1.2.The risk-free rate is 6 percent and the expected market rate of return is 12 percent.Determine the required rate of return on the security.
A)7.2%
B)14.4%
C)19.2%
D)13.2%

Name: Elephant Company common stock has a beta of 1.2.The risk-free rate is 6 percent and the expected market rate of return is 12 percent.Determine the required rate of return on the security. A)7.2% B)14.4% C)19.2% D)13.2%
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Quizplus · Accepted Answer

kⱼ = 6% + 1.2(12% - 6%) = 13.2%

Elephant Company Common Stock Has a Beta of 1