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 ago

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