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Question
Brodkey Shoes has a beta of 1.30, the T-bill rate is 3.00%, and the T-bond rate is 6.5%. The annual return on the stock market during the past 3 years was 15.00%, but investors expect the annual future stock market return to be 13.00%. Based on the SML, what is the firm's required return?a. 13.51%
b. 13.86%
c. 14.21%
d. 14.58%
e. 14.95%
Answer
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