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You`re willing to invest in a stock of a company A. The company has performed better than the historical return of S&P500 Index of 7.5%.

You`re willing to invest in a stock of a company A. The company has performed better than the historical return of S&P500 Index of 7.5%. The stock`s average return is 1.20x as volatile (or correlated) as S&P500 over the last year. Current yield on a U.S. 10-year treasury is 2.5%. Calculate expected return on the stock.

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