Question

Magee Company's stock has a beta of 1.20, the risk-free rate is4.50%, and the market risk premium is 5.00%. What is Magee'srequired return?

(Points: 4)
10.25%
10.50%
10.75%
11.00%
11.25%

Answer 1

Hello !

The answer is 10.50%

Magee's required return

= risk-free rate + beta * market risk premium

= 4.5% + 1.20 * 5%

= 4,5% + 6%

= 10.50%