The stock of G BK Corporation has a beta of 0.65. If the risk-free rate of return is 3% and the expected market return is 9%, the expected return for G BK is closest to:
B is correct. E(RGBK)=Rf + βGBK × [E(RMkt) - Rf ] =0.03 + 0.65 × (0.09 -0.03) = 0.069.