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If the expected return on XYZ stock is 16.34 percent, the risk-free rate is 2.26 percent, the expected rate of inflation is 1.32 percent, and
If the expected return on XYZ stock is 16.34 percent, the risk-free rate is 2.26 percent, the expected rate of inflation is 1.32 percent, and XYZ stock has a beta of 1.65, then what is the market premium?
a. | 8.53% (plus or minus 0.03 percentage points) | |
b. | 9.10% (plus or minus 0.03 percentage points) | |
c. | 10.79% (plus or minus 0.03 percentage points) | |
d. | 6.27% (plus or minus 0.03 percentage points) | |
e. | None of the above is within 0.03 percentage points of the correct answer |
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