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The risk-free rate of return is 5.2 percent and the market risk premium is 8.4 percent. what is the expected rate of return on a stock with a beta of 1.34?
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The risk-free rate of return is 5.2 percent and the market risk premium is 8.4 percent. what is the expected rate of return on a stock with a beta of 1.34?

User DAddYE
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Beta is a measure of how much riskier an asset's systematic risk is in comparison to the market. In this case, it is 1.34 times.

Thus expected return = 5.2 + 1.34(8.4)=16.456
User Melad Basilius
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