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A stock has a beta of 1.15 and a reward-to-risk ratio of 6.15 percent. If the risk-free rate is 3 percent, what is the stock's expected return
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A stock has a beta of 1.15 and a reward-to-risk ratio of 6.15 percent. If the risk-free rate is 3 percent, what is the stock's expected return

User BkDJ
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1 Answer

4 votes

Answer:

10.07%

Step-by-step explanation:

According to CAPM

the stock's expected return = risk free rate + (beta x reward-to-risk ratio )

3% + (6.15% x 1.15) = 10.07%

User Moin Shirazi
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