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Suppose two factors are identified for the U. S. economy the growth rate of industrial production, IP and the rate, IR, IP is expected to be 4% and IR 6%. A stock with a beta of 1 on IP and 0.9 on IR currently is expected to provide a rate of return of 12%.

If industrial production actually grows by 5% while the inflation rate turns out to be 9%, what is your best guess for the rate of return on the stock? (Round your answer to 1 decimal place.)

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Financial Management, Finance

Category:- Financial Management
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