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Cooley company's stock has a beta of 1.32, the risk-free rate is 4.25%, and the market risk premium is 5.50%. what is the firm's required rate of return?
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Cooley company's stock has a beta of 1.32, the risk-free rate is 4.25%, and the market risk premium is 5.50%. what is the firm's required rate of return?
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Aug 16, 2019
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Cooley company's stock has a beta of 1.32, the risk-free rate is 4.25%, and the market risk premium is 5.50%. what is the firm's required rate of return?
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11.51%
The required rate of return = risk-free rate + Beta * (market risk premium)
Here, we multiply the beta of 1.32 times the market risk premium of 5.50%, then add the risk-free rate of 4.25% to get the required rate of return, or 11.51%.
EngineeredE
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Aug 21, 2019
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