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Question 2 a) A stock has an expected return of 17.4%, the risk-free rate is 2.5%, and the market risk premium is 5.8%. What
Question 2 a) A stock has an expected return of 17.4%, the risk-free rate is 2.5%, and the market risk premium is 5.8%. What must the be this stock be? Show your work. (5 points) (b) What does the beta of the stock (in question (a) signify in terms of systematic risks? (2 points) (c) Stocks are expected to rise this year. As an investor how would we interpret the results from question (a)? How does the B this stock compare its Standard Deviation, and which is more meaningful to an investor? Explain your answer. (2 points)
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