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You consider buying a share of stock at a price of $24. The stock is expected to pay a dividend of $1.32 next year, and
You consider buying a share of stock at a price of $24. The stock is expected to pay a dividend of $1.32 next year, and your advisory service tells you that you can expect to sell the stock in 1 year for $27. The stock's beta is 0.6, rf is 10%, and E[rm] = 20%. What is the stock's abnormal return?
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