# Question

If we accept the Sharpe model as a description of expected returns, using the data in Table 16.1, find the expected return on a stock in the construction industry with the following characteristics. Assume a riskless rate of 8%:

Beta = 1.2

Yield = 6

Size = 0.4

Bond beta = 0.2

Alpha = 1

Beta = 1.2

Yield = 6

Size = 0.4

Bond beta = 0.2

Alpha = 1

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