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Question 21 (1 point) Assume that there is a 40% chance that the market return next year will be 16.50%. The market can also
Question 21 (1 point) Assume that there is a 40% chance that the market return next year will be 16.50%. The market can also return 5.00% or 6.50%, both of which are equally likely (i.e., the probability of either outcome is [1-40%]/2). Assume the risk-free rate is 6.50%. If a firm's beta is 1.41, what is its expected return on equity next year? Instructions: Round the result to two decimal places and do not put the "%" symbol in the answer box. For example if you get a result of 3.0492% then write 3.05 in the answer box below. Your Answer: K
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