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What is the firms expected rate of return

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Reference no: EM132757558

Question: Part 1: Dallas Star Inc. 's stock has a 35% chance of producing a 10% return, and a 60% chance of producing a 15% return.

What is the firm's expected rate of return?

What is the firm's Standard Deviation?

What is the firm's Coefficient of Variation?

Part 2: Calculate the required rate of return for Dallas Star Inc., assuming that

(1) the nominal risk-free rate is 4.0%,

(2) expected market return is 10% and (3) the firm has a beta of 1.2.

(Hint: You need to find out market risk premium first.)

Reference no: EM132757558

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