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The Expected Return for a Stock, Calculated Using the CAPM

Question 18

Multiple Choice

The expected return for a stock, calculated using the CAPM, is 10.5 percent. The market return is 9.5 percent, and the beta of the stock is 1.50. Calculate the implied risk-free rate.


A) 7.50 percent
B) 13.91 percent
C) 17.50 percent
D) 21.88 percent
E) 14.38 percent

Correct Answer:

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