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2. Corporation wishes to determine the required return on asset K, which has a beta of 1.2. The risk-free rate of return is 2%; the

2. Corporation wishes to determine the required return on asset K, which has a beta of 1.2. The risk-free rate of return is 2%; the return on the market is 10%.

What is the required return?

rk =

If my investment advisor told me the stock would yield a 10% return should I purchase the stock?

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