Question: Using the formula for the security market line (Formula 177 on page 452), if the risk-free rate (RF) is 7 percent, the beta (bi) is

Using the formula for the security market line (Formula 17–7 on page 452), if the risk-free rate (RF) is 7 percent, the beta (bi) is 1.25, and the market rate of return (KM) is 11.8 percent, compute the anticipated rate of return (Ki).

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