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A stock is expected to earn 25 percent in a boom economy, 14.50 percent in a normal economy, and lose 25 percent in a recessionary
A stock is expected to earn 25 percent in a boom economy, 14.50 percent in a normal economy, and lose 25 percent in a recessionary economy. There is a 20 percent chance the economy will boom and a 66 percent chance the economy will be normal. What is the expected risk premium for this stock if the risk-free rate is expected to be 4.30 percent? Multiple Choice 6.77 percent 5.37 percent 6.48 percent 5.81 percent What is the expected rate of return on a stock that has a beta of 1.43 if the market risk premium is 7.5 percent and the risk-free rate is 2.8 percent? Multiple Choice 11.67 percent 9.52 percent 13.53 percent 12.60 percent
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