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24 February, 15:10

Juniper Networks Inc has a beta of 2. and the expected market return is 0.18. If Treasury bills (risk-free asset) are currently yielding 0.03 percent, find the expected return for Juniper Networks Inc. Group of answer choices 33.00% 21.09% none of the answers is correct 24.08% 36.18%

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  1. 24 February, 15:58
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    Answer: 33.00%

    Explanation:

    To calculate the expected return for Juniper Networks, we can use the Capital Asset Pricing Model.

    The formula goes as follows,

    ERi = Rf + βi (ERm-Rf)

    Where,

    ERi = Expected return of investment

    Rf = Risk-free rate

    βi = Beta of the investment

    ERm = Expected return of the market

    Plugging in the figures we have,

    ERj = 0.03 + 2 (0.18 - 0.03)

    ERj = 0.33

    ERj = 33%

    The expected return for Juniper Networks Inc is 33%
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