Question
In: Finance
The market risk premium is 10.0 percent, and the risk-free rate is 5.0 percent. If the expected return on a bond is 10.5 percent, what is its beta?
The market risk premium is 10.0 percent, and the risk-free rate is 5.0 percent. If the expected return on a bond is 10.5 percent, what is its beta? (Round answer to 2 decimal places, e.g. 15.25.)
Beta of the bond
Solutions
Expert Solution
Expected rate=risk free rate+Beta*market risk premium
10.5=5+Beta*10
Beta=(10.5-5)/10
which is equal to
=0.55
jeff jeffy answered 2 years agoRelated Solutions
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