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Suppose that over the last 20 years, company XYZ has averaged a return of 13%. Over the same period, the Treasury bond rate has averaged

Suppose that over the last 20 years, company XYZ has averaged a return of 13%. Over the same

period, the Treasury bond rate has averaged 4%. The current estimate of the Treasury bond rate is

6.5%. Using the historical approach, what is the estimate of XYZs expected return.

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