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    Required rate of return and investment strategy

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    You expect the risk-free rate (RFR) to be 5 percent and the market return to be 12.2 percent. You also have the following information about three stocks

    Current Expected Expected
    Stock Beta Price Price Dividend
    X 1 26 26 0.75
    Y 2 41.5 44 1.50
    Z 2 50.00 58 0.95

    What are the expected (required) rate of return for the three stocks?
    What are the estimated rates of return for the three stocks?
    What is your investment strategy concerning the three stocks?Discuss your decision?

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    https://brainmass.com/business/beta-and-required-return-of-a-project/required-rate-of-return-and-investment-strategy-117933

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    You expect the risk-free rate (RFR) to be 5 percent and the market return to be 12.2 percent. You also have
    the following information about three ...

    Solution Summary

    This posting calculates the required rate of return on three stocks and the current expected rate of return and suggests the correct investment strategy to take advantage of the mis-pricing on the stock market.

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