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Suppose that Fords stock volatility (i.e. standard deviation) is 40% while the market volatility is 20%. If the correlation between Ford and the market is
Suppose that Fords stock volatility (i.e. standard deviation) is 40% while the market volatility is 20%. If the correlation between Ford and the market is 0.8, what is the expected return on Fords stock? Assume that the expected return on the market is 12% and the risk-free rate is 4%.
A. 16.8%
B. 10.4%
C. 7.2%
D. 4%
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