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assume that the risk-free rate is 4.5 and the market risk premium is 8.5 what is the companys return using

1 Answer

5 votes

Answer: 17.25%

Step-by-step explanation:

Question is incomplete but given the variables involved, the company's return can be calculated by using the Capital Asset Pricing Model the formula of which is;

Required return = Risk free rate + beta ( market risk premium)

Lets assume a beta of 1.5 ( you'll use your beta).

Required return = 4.5% + 1.5 * 8.5%

= 17.25%

User Israel Perales
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