Dee's fashions has a growth rate of 5.2 percent and is equally as risky as the market while its stock is currently selling for $28 a share. the overall stock market has a return of 12.6 percent and a risk premium of 8.7 percent. what is the expected rate of return on this stock?

12.6%

Explanation:

Using the Capital Market Pricing Model (CAPM) to compute the expected rate of return on Dee's Fashion stock.

Expected rate of return =

Where R(f) = risk free rate of return, or market return less risk premium = 12.6% - 8.7% = 3.9%

= the risk of the stock relative to the market risk. In this case, beta = 1, since the company is equally as risky as the market (as noted in the question)

R(m) = return of the stock market = 12.6%

Therefore, the expected rate of return on the stock

= 3.9% + 1 * (12.6% - 3.9%)

= 3.9% + 8.7%

= 12.6%.

The return is the same as the stock market return because the stock is equally as risky as the market.

the correct answer is economics is a game without winners or losers.

unlike sports or games economic is a game without losers or winner rather it is a game where everyone wins. parties of business doing businesses exchange money with each other and hence exchange is done on the basis of goods. one party takes the goods and other sales it so there is winner on both sides. each party values more highly the good it gets than the good it gives up. both sides exchange only because both intend to increase their value. so there is no concept of lose or win.