The market risk premium is expected to remain at 7% for the future. The expected risk free rate is 4.5%. Based on its current price and expected future payoffs, the stock in Trail Brothers Inc (which has a beta of 1.45) has an expected return of 14%. Would you recommend buying this stock or would you recommend selling it? Justify your answer with calculations.
$2.50+$0.75+$3.85+$12.70
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