The current one-year treasury bill rate is 33 and the

Question

You have run a regression of monthly returns on TXBT, a large biotechnology firm, against monthly returns on the S&P 500 index, and come up with the following output

R_Stock= 2.34% + 1.77 x R_Market

R²= 0.4

The current one-year Treasury bill rate is 3.3 and the current thirty-year bond rate is 8%. The firm has 132 million shares outstanding, selling for $73.36 per share. The short term equity risk premium is 5.1 and the long term equity risk premium is 7.7. What is the expected return on this stock over the next year?

(Answer Format to two decimal places with NO PERCENT SIGN, for example, for three percent put: 3.00)