The return on a average stock


A manufacturer for stylish clothing for teenagers. The firm has a beta of 1.4 and earned a return on equity of 20% last year. However, a new financial crisis has just hit the stock market and Wall Street experts think the return on a average stock will be cut in half this year. The market has been producing equity returns of about 18% lately. Estimate this year's return on an equity investment for this company.

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Accounting Basics: The return on a average stock
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