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A stock has a beta of 1.2. Suppose the expected market risk premium (EMRP) is 6% and the risk-free rate is 1%. What is this stock's expected return according to the CAPM
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Feb 15, 2021
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A stock has a beta of 1.2. Suppose the expected market risk premium (EMRP) is 6% and the risk-free rate is 1%. What is this stock's expected return according to the CAPM
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Answer:
7%
CAPM = 1% + [6% - 1%](1.2) = 1% + 6% = 7%
Yoannes Geissler
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Feb 20, 2021
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