The markets in general are paying a 2% real rate of return. Inflation is expected to be 3%. ABC stock commands a 6% risk premium. What is the expected rate of return on ABC stock?

 

 

The required rate of return on the Cosmos Corporation's common stock is 10%, the current real rate of return in the market is 1%, and the inflation rate is 3%. In this case, the risk premium associated with Cosmos stock is

Please explain in details with formula.

Answer rating: 100% (QA)

To calculate the expected rate of return on ABC stock we need to consider the real rate of return in... View the full answer