Problem:
A stock has a beta of 1.55, the expected return on the market is 12 percent, and the risk-free rate is 4.8 percent.
Required:
Question: What must the expected return on this stock be?
- 15.16%
- 16.6%
- 15.96%
- 23.4%
- 16.76%
Note: Provide support for rationale.