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Plaid Pants, Inc. common stock has a beta of 0.90, while Acme Dynamite Company common stock has a beta of 1.80. The expected return on
Plaid Pants, Inc. common stock has a beta of 0.90, while Acme Dynamite Company common stock has a beta of 1.80. The expected return on the market is 10 percent, and the risk-free rate is 6 percent. According to the capital-asset pricing model (CAPM) and making use of the information above, the required return on Plaid Pants' common stock should be and the required return on Acme's common stock should be O 3.6 percent; 7.2 percent 9.6 percent; 13.2 percent O 9.0 percent; 18.0 percent 14.0 percent: 23.0 percent
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