The market's required rate of return on Sure's stock is

Sure Tool Company is expected to pay a dividend of $2 in the upcoming year. The risk-free rate of return is 4%, and the expected return on the market portfolio is 14%. Analysts expect the price of Sure Tool Company shares to be $22 a year from now. The beta of Sure Tool Company's stock is 1.25.

A. 14.0%.
B. 17.5%.
C. 16.5%.
D. 15.25%.
E. None of the options are correct.


C. 16.5%.

4% + 1.25(14% 4%) = 16.5%.

Business

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