Adequate information: Expected GNP growth = 3.5% Expected interest rate = 2.9% Beta on change in GNP (ß G N P ) = 1.3 Beta on change in interest rate (ß r ) = -0.47 Expected rate of return (ER) = 10.2% Actual GNP growth = 3.2% Actual interest rate = 2.7% To compute: The revised expected return. Introduction: Expected return simply refers to the return that is anticipated on the investment.

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Chapter 12, Problem 1QAP

Summary Introduction

Adequate information:

Expected GNP growth = 3.5%

Expected interest rate = 2.9%

Beta on change in GNP (ß_G_N_P) = 1.3

Beta on change in interest rate (ß_r) = -0.47

Expected rate of return (ER) = 10.2%

Actual GNP growth = 3.2%

Actual interest rate = 2.7%

To compute: The revised expected return.

Introduction: Expected return simply refers to the return that is anticipated on the investment.

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