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What is the expected yield on the market portfolio at a time when Treasury bills are yielding 6%, and a stock with a beta of 1.5 is expected to yield 18%
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What is the expected yield on the market portfolio at a time when Treasury bills are yielding 6%, and a stock with a beta of 1.5 is expected to yield 18%

User Brian G Swanson
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1 Answer

6 votes

Answer:

8%

Step-by-step explanation:

According to CAPM :

expected stock yield =risk free rate + (beta x market yield)

6% + 1.5 x market yield = 18%

18% - 6% = 1.5market yield

solving for market yield gives

market yield = 8%

User Jimmt
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