First bank has 10000000 shares of common stock outstanding, Ask an Expert

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First Bank has 10,000,000 shares of common stock outstanding. The stock is traded in the over-the-counter market (there is a market for the stock through local brokerage firms, but is not traded on a stock exchange) where the present price is $34.50 per share. The present rate on Treasury bonds is 7.25 percent and the expected future return on stocks in general is approximately 12 percent. First Bank’s stock has a Beta of 0.6. Compute the expected rate of return on the First Bank stock, using the Capital Asset Pricing Model (CAPM) approach?

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Financial Management, Finance

Category:- Financial Management
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