Question

nanometrics, inc. has a beta of 3.15. if the market return is expected to be 10 percent and the risk-free rate is 3.5 percent, what is nanometrics required return? (round your answer to 2 decimal places.)

Answer 1

The required return for Nanometrics Inc. is 24.98% according to the Capital Asset Pricing Model (CAPM) calculation.

To calculate the required return for Nanometrics Inc., we can use the Capital Asset Pricing Model (CAPM). The CAPM formula is:

Required Return = Risk-Free Rate + Beta * (Market Return - Risk-Free Rate) Given that Nanometrics Inc. has a beta of 3.15, the market return is expected to be 10%, and the risk-free rate is 3.5%, we can plug in these values into the formula:

Required Return = 3.5% + 3.15 * (10% - 3.5%)

Calculating it:

Required Return = 3.5% + 3.15 * 6.5%

Required Return = 3.5% + 20.48%

Required Return = 24.98%

Therefore, Nanometrics Inc. has a required return of 24.98%.