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Adam Wants to Determine the Required Return on a Stock

Question 181

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Adam wants to determine the required return on a stock portfolio with a beta coefficient of 0.5. Assuming the risk-free rate of 6 percent and the market return of 12 percent, compute the required rate of return.

Correct Answer:

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r = RF + b(rm - RF)
= 0.06 + 0.5(...

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