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You consider buying a share of stock at a price of $22. The stock is expected to pay a dividend of $2.06 next year, and
You consider buying a share of stock at a price of $22. The stock is expected to pay a dividend of $2.06 next year, and your advisory service tells you that you can expect to sell the stock in 1 year for $25. The stock's beta is 1.3, rf is 7%, and E[rm] = 17%. What is the stock's abnormal return?
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