Estimate of the expected rate of return on the stock

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Reference no: EM131043720

Suppose that two factors have been identified for the U.S. economy: the growth rate of industrial production, IP, and the inflation rate, IR. IP is expected to be 3%, and IR 4.4%. A stock with a beta of 2.3 on IP and 1.6 on IR currently is expected to provide a rate of return of 10%. If industrial production actually grows by 6%, while the inflation rate turns out to be 6.0%, what is your revised estimate of the expected rate of return on the stock? (Do not round intermediate calculations. Round your answer to 1 decimal place. Omit the "%" sign in your response.) Revised expected rate of return %

Reference no: EM131043720

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