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A stock has an expected return of 11 percent, the risk-free rate is 5.8 percent, and the market risk premium is 5 percent. What is the stock's beta
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A stock has an expected return of 11 percent, the risk-free rate is 5.8 percent, and the market risk premium is 5 percent. What is the stock's beta

User Mathter
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1 Answer

12 votes

Answer:

1.04

Step-by-step explanation:

Expected return = Risk free rate + Beta*Market risk premium

11 = 5.8 + Beta*5

Beta = (11 - 5.8) / 5

Beta = 5.2/5

Beta = 1.04

So, the stock's beta is equal to 1.04

User BShaps
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