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The Risk Premium for Exposure to Aluminum Commodity Prices Is

Question 39

Multiple Choice

The risk premium for exposure to aluminum commodity prices is 4%, and the firm has a beta relative to aluminum commodity prices of .6. The risk premium for exposure to GDP changes is 6%, and the firm has a beta relative to GDP of 1.2. If the risk-free rate is 4%, what is the expected return on this stock?


A) 10%
B) 11.5%
C) 13.6%
D) 14%

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