Vespucci is adding a project to the company portfolio and has the following information: the expected...
Vespucci is adding a project to the company portfolio and has the following information: the expected market return is 14.2%, the risk-free rate is 6.5%, and the expected return on the new project is 14.1%. What is the project's beta?
What is the project's beta?
Homework Answers
As per CAPM,
Expected return =Risk-free+beta(expected market return-expected return)
Rearranging the formula, beta is:
=(14.1%-6.5%)/(14.2%-6.5%)
=0.987
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