If the expected return on the market is 10.19 percent, the inflation rate is 1.11 percent, the risk-free rate is 2.10 percent, and Big Madden common stock has a beta of 2.36, then what is the expected return for Big Madden stock? 20.08% (plus or minus 4 bps) 23.53% (plus or minus 4 bps) 19.09% (plus or minus 4 bps) 21.19% (plus or minus 4 bps) None of the above is within 4 bps of the correct answer

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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If the expected return on the market is 10.19 percent, the inflation rate is 1.11 percent, the risk-free rate is 2.10 percent, and Big Madden common stock has a
beta of 2.36, then what is the expected return for Big Madden stock?
20.08% (plus or minus 4 bps)
23.53% (plus or minus 4 bps)
19.09% (plus or minus 4 bps)
21.19% (plus or minus 4 bps)
None of the above is within 4 bps of the correct answer
Transcribed Image Text:If the expected return on the market is 10.19 percent, the inflation rate is 1.11 percent, the risk-free rate is 2.10 percent, and Big Madden common stock has a beta of 2.36, then what is the expected return for Big Madden stock? 20.08% (plus or minus 4 bps) 23.53% (plus or minus 4 bps) 19.09% (plus or minus 4 bps) 21.19% (plus or minus 4 bps) None of the above is within 4 bps of the correct answer
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