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5. Suppose the risk-free rate is 7.7% and the market return is 10%. Calculates the expected rate of return on a stock with a volatility
5. Suppose the risk-free rate is 7.7% and the market return is 10%. Calculates the expected rate of return on a stock with a volatility (beta) of 3%. (4 points)
6. Determine the expected rate of return for Campo Industries, assuming that the inflation rate will be 3.2%. Also, the risk-free rate is 2.2% and the market risk premium is 5.1%. The company has a beta of 1.7% and the rate of return for the last 4 years has been 7.6%. (6 points)
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