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To estimate the required risk-adjusted rate of return on a highly volatile energy stock, a...

To estimate the required risk-adjusted rate of return on a highly volatile energy stock, a risk associate compiled the following statistics:

Risk-free rate = 5%

Beta = 2.5

Market Risk = 8%

Using the Capital Asset Pricing Model, she estimates the rate of return to be equal:

A.

10%

B.

15%

C.

25%

D.

40%

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