Question

A stock has an expected return of 6.5 percent, the risk-free rate is 1.1 percent, and the market risk premium is 5 percent. what is the stock's beta?

a. 0.96
b. 0.98
c. 1.00
d. 1.02
e. 1.04
f. 1.06
g. 1.08
h. 1.10

Answer 1

The stock's beta is 1.08.

Step-by-step explanation:

To calculate the stock's beta, we can use the formula:

Beta = (Expected Return - Risk-Free Rate) / Market Risk Premium

Plugging in the values, we get: Beta = (6.5% - 1.1%) / 5% = 1.08.

So, the stock's beta is 1.08.