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What is the required rate of return for the stock

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Please explain how to solve the following:

A stock has a Beta of 1.25. What is the required rate of return for the stock if the market risk premium is 8% and risk free rate is 2%? Given that the stock is trading at $115 today, what would you expect the stock price to be one year from (ignore dividends)?

a. 12% , $128.8

b. 10% , $126.5

c. 12%, $115

d. Insufficient information

Reference no: EM132103776

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