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Stock A beta is 1.2 and the risk premium of the stock in the same industry is 5.5%. If the risk free rate of return

Stock A beta is 1.2 and the risk premium of the stock in the same industry is 5.5%. If the risk free rate of return is 3.5%, calculate the expected return on stock A.       

2)

  1. Given the following stock return over a 5-year period, calculate the geometric return.

                             

Year

2013

2014

2015

2016

2017

Return

10%

-2%

5%

8%

11%

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1 To calculate the expected return on Stock A well use the Capital Asset Pricing Model CAPM formula ... blur-text-image

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