Q2. (10 Points) What is ABC Inc's beta if its expected return is 10.7%, the market...

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Question

Q2. (10 Points) What is ABC Incs beta if its expected return is 10.7%, the market risk premium is 6.5%, and the riskless rat

business finance

Answer 1

Answer #1

Based on CAPM,

Expected return on security = Riskfree security + Beta * Market risk premium

10.7% = 2% + Beta * 6.5%

8.7% = Beta * 6.5%

Beta = 1.34

Answer 2

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