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Bass Clef Music Stores' stock has a risk premium of 7 percent while the inflation rate is 1.9 percent and the risk-free rate is 2.2 percent. What is the expected return on this stock?

Respuesta :

Answer:

expected return on this stock is  9.2 percent

Explanation:

given data

risk premium = 7 percent

inflation rate = 1.9 percent

risk-free rate = 2.2 percent

to find out

expected return on this stock

solution

we know that expected return on this stock formula that is express as here

expected return on this stock = Risk free rate + Risk premium   .....................1

put here value we get Expected return

Expected return =  2.2 percent + 7 percent

Expected return =  9.2 percent

so expected return on this stock is  9.2 percent

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