Assume that a security is fairly priced and has an expected rate of return of 0.17. The market expected rate of return is 0.11, and the risk-free rate is 0.04. The beta of the stock is
A. 1.25.
B. 1.86.
C. 1.
D. 0.95.
B. 1.86.
17% = [4% + (11% – 4%)]; 13% = (7%); = 1.86.
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