Question: Please help Question 12 Jo Cox decides to check whether Fred, the nerdy banker, was correct in claiming that Geothermal's cost of equity is 14%.

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Question 12 Jo Cox decides to check whether Fred, the nerdy banker, was correct in claiming that Geothermal's cost of equity is 14%. She estimates Geothermal's beta at 1.20. The risk-free interest rate is 6%, and the long-run average market risk premium is 7.6%. What is the expected rate of return on Geothermal's common stock, assuming of course that the CAPM is true? A. 5.88% B. 15.12% C. 7.84% D. 3.65%

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