Question
In: Finance
Consider the CAPM. The risk-free rate is 3% and the expected return on the market is...
Consider the CAPM. The risk-free rate is 3% and the expected return on the market is 17%. The expected return on a stock with a beta of 1.2 is %.
Please enter your answer with TWO decimal points.
Solutions
Expert Solution
According to CAP.M
Expected return = Risk Free return + beta × ( Market return - risk free return)
= 3% + 1.2 ×(17%-3%)
= 3% + 1.2(14%)
= 3% + 16.8%
= 19.8%
Expected return = 19.8%
jeff jeffy answered 2 years agoRelated Solutions
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