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The risk-free rate of return is 2.7%, the inflation rate is 3.1%, and the market risk premium is 6.9%. What is the expected return on a stock with a beta of 1.08?

Respuesta :

Answer:

Expected rate of return will be 10.15 %

Explanation:

We have given risk free rate of = 2.7 %

Inflation rate = 3.1 %

Market risk premium [tex]=6.9%[/tex]

[tex]\beta =1.08[/tex]

We have to find the expected rate of return

Expected rate of return is given by [tex]expected\ return=risk\ free\ return+\beta \times market\ risk\ premium=2.7+1.08\times 6.9=10.15[/tex] %

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