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If beta of a stock is 1.4, market return is 12% and risk-free rate is 6%, the CAPM expected return is:
A14.4%
B10.4%
C16.8%
D18.0%
Answer & Solution
Correct answer: A. 14.4%
1. Identify what the question asks: this concept maps to capm (§1.4).
2. Apply the framework or formula relevant to the topic.
3. Eliminate distractors and arrive at the correct option (A).
_Source: ICAI BoS CA Final Paper 2, Ch 4 "Security Analysis"_
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