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Calculate the firm expected return

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Reference no: EM132967637

Question - Suppose that an analyst uses the two-factor model to calculate an expected return of a firm. A firm has a market beta of 1.2 and a T-bond beta of 0.7. The risk premium of the market index is 6 percent, while that of the T-bond portfolio is 3 percent. The risk-free rate is 4 percent. Calculate the firm's expected return!

Reference no: EM132967637

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