Answer:
12.3%
Explanation:
The stock Ernst electric has beta of 0.87 percent
The market risk premium is 8.6 percent
The risk free rate is 3.7 percent
Therefore the expected return can be calculated as follows
= risk free rate + risk premium
= 3.7 % + 8.6%
= 12.3 %
Hence the expected rate of return on Ernst electric stock is 12.3%
