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Sagot :
Answer:
20.4%
Explanation:
Calculation to determine what the expected return on IBM is:
Using this formula
E(Ribm)=Risk-free rate+(Market portfolio -Risk-free rate) Beta
Let plug in the formula
E(Ribm) = 6% +(18%-6%)1.2
E(Ribm)=6%+12%(1.2)
E(Ribm)=6%+14.4%
E(Ribm)=20.4%
Therefore the expected return on IBM is:20.4%
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