What is the cost of common stock if its beta is 1.5 and market and risk-free...

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Question

What is the cost of common stock if its beta is 1.5 and market and risk-free returns are 11% and 2%, respectively?

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business finance

Answer 1

Answer #1

Ans 15.50%

CAPM Return =	Risk free Return + (Market Return - Risk free return)* Beta
CAPM Return =	2% + (11% - 2%) * 1.5
CAPM Return =	15.50%

Answer 2

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