What is your revised estimate of the expected rate of return

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Question - Suppose that two factors have been identified for the U.S. economy: the growth rate of industrial production, IP, and the inflation rate, IR. IP is expected to be 2%, and IR 2.5%. A stock with a beta of 2.4 on IP and 1.7 on IR currently is expected to provide a rate of return of11%. If industrial production actually grows by 7%, while the inflation rate turns out to be 4.5%, what is your revised estimate of the expected rate of return on the stock?

Reference no: EM133251855

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