Question

has a beta of 12 , and iss realted rote of return has averaged 13.0% over the past 5 vears. Round veur enswer to twe dedimal places.

Answer 1

To calculate the expected rate of return for an investment with a beta of 12 and assuming the risk-free rate is not provided, you can use the Capital Asset Pricing Model (CAPM):

Expected Return = Risk-Free Rate + Beta * (Market Rate of Return - Risk-Free Rate)

Let's assume a typical risk-free rate of around 2% for this calculation:

Expected Return = 2% + 12 * (13.0% - 2%)

Expected Return = 2% + 12 * 11%

Expected Return = 2% + 132%

Expected Return = 134%

Rounding to two decimal places, the expected rate of return for the investment with a beta of 12 is 134.00%.