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Thayer stock has a beta of 1
Thayer stock has a beta of 1.38. The risk-free rate of return is 3.87%, the requied return on the market is 12.90%.
What is the required rate of return on this stock?
Expert Solution
The return is computed as shown below:
= risk free rate + beta x (return on market - risk free rate)
= 3.87% + 1.38 x (12.90% - 3.87%)
= 3.87% + 12.4614%
= 16.3314%
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