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A stock has a beta of 1.2, the expected return on the market is 12%, and the risk-free rate is 3%. What must the expected
A stock has a beta of 1.2, the expected return on the market is 12%, and the risk-free rate is 3%. What must the expected return on this stock be? How does the expected return change if the beta is 2.8? Briefly explain why beta increases or decreases the expected return.
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