Johnson expected and required rates of return

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Reference no: EM131875227

The realized returns for the market and Johnson Drugs for the last four years are given below:

Year Market Johnson

1 10% 5%

2 15% 0%

3 -5% 14%

4 0% 10%

An average stock has a required return of 12 percent, and the market risk premium is 4 percent. If Johnson's expected rate of return is 8 percent, what is the difference between Johnson's expected and required rates of return?

Reference no: EM131875227

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