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You bought 100 shares of ABC common stock at $27 per share today. You plan to sell the shares at an expected price of $30

You bought 100 shares of ABC common stock at $27 per share today. You plan to sell the shares at an expected price of $30 per share 1 year later. ABC is expected to distribute common stock dividend of $0.50 per share during the holding period.

What is the holding period rate of return?

Suppose the 1-year Treasury yields an annual rate of return of 2%. What is the risk premium of your investment?

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