Question: If a stock has a beta coefficient, , equal to 1.20, the risk premium associated with the market is 9 percent, and the risk-free rate

If a stock has a beta coefficient, , equal to 1.20, the risk premium associated with the market is 9 percent, and the risk-free rate is 5 percent, application of the capital asset pricing model indicates the appropriate return should be ____.

a. 14% b. 9.8% c. 15.8% d. 5% e. None of the above is correct.

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