A stock has a beta of 115, the expected return on the market is 10.3 percent,...

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Question

A stock has a beta of 115, the expected return on the market is 10.3 percent, and the risk-free rate is 31 percent. What must

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Answer 1

Answer #1

EXPECTED RETURN = Rf + beta (Rm-Rf) [ CAPM approach]

beta = 1.15, Rf = 3.1%, Rm = return on market = 10.3%

EXPECTED RETURN = 3.1% + 1.15(10.3%-3.1%) =11.38%

Answer : 11.38% (Thumbs up please)

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Answer 2

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