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Suppose ABC stock has a beta of 0.8. If the risk-free interest rate is 4.0% and the expected return of the market portfolio is 10.0%,

Suppose ABC stock has a beta of 0.8. If the risk-free interest rate is 4.0% and the expected return of the market portfolio is 10.0%, according to the CAPM, what is the expected return of the stock?

A. 7.8%

B. 5.8%

C. 8.8%

D. 12.8%

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