Internal common stock: Jones Industries has a beta of 1.39. The risk-free rate as measured by the rate on short-term US Treasury bill is 3 percent, and the expected return on the overall market is 12 percent. Determine the expected rate of return on Jones’s stock. Here are the details: Jones Total Assets $2,000,000
- Long- & short-term debt $600,000
- Common internal stock equity $400,000
- New common stock equity $1,000,000
- Total liabilities & equity $2,000,000