The stock in Bowie Enterprises has a beta of 1.24. The expected return on the market...
The stock in Bowie Enterprises has a beta of 1.24. The expected return on the market is 11.20 percent and the risk-free rate is 2.82 percent. What is the required return on the company's stock?
Homework Answers
Using CAPM to solve the question:
Required rate of return = Risk free rate of return + Beta * ( Expected return - Risk free rate of return )
= 2.82% + 1.24 * ( 11.2 - 2.82 ) %
= 13.2112%
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