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A manager believes his firm will earn a 18.60 percent return next year. His firm has a beta of 1.25, the expected return on the

A manager believes his firm will earn a 18.60 percent return next year. His firm has a beta of 1.25, the expected return on the market is 15.60 percent, and the risk-free rate is 7.60 percent.

Compute the return the firm should earn given its level of risk.

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