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The risk-free rate is 4.5%, the market risk premium = ( E(Rm) - Rf) is 10.1%,...

The risk-free rate is 4.5%, the market risk premium = ( E(Rm) - Rf) is 10.1%, and the stock’s beta is 1.3. What is the required rate of return on the stock, E(Ri)? Use the CAPM equation.

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Answer #1

Required rate=risk free rate+beta*market risk premium

=4.5+(10.1*1.3)

Which is equal to

=17.63%

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