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The realized returns for the market and Johnson Drugs for the last four years are given below: Year Market Johnson 1 10% 5% 2 15%

The realized returns for the market and Johnson Drugs for the last four years are given below:
Year Market Johnson
1 10% 5%
2 15% 0%
3 -5% 14%
4 0% 10%
An average stock has a required return of 12 percent, and the market risk premium is 4 percent.
If Johnson's expected rate of return is 8 percent, what is the difference between Johnson's
expected and required rates of return?

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