Register
A stock has an expected return of 12.4 percent, the risk-free rate is 6.5 percent, and the market risk premium is 10 percent. What must the beta of this stock be? (Do not round intermediate calculations
85.0k views
2 votes
A stock has an expected return of 12.4 percent, the risk-free rate is 6.5 percent, and the market risk premium is 10 percent. What must the beta of this stock be? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

User Scottru
by
5.0k points

1 Answer

4 votes

Answer beta of this stock =0.59

Step-by-step explanation:

According to Capital Asset Pricing Model CAPM, we have that

Expected return= risk free rate+(betaXmarket risk premium)

12.4=6.5 + beta x 10

Beta=(12.4 - 6.5)/10

=0.59

User Mdesantis
by
5.8k points
Ask a Question
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.

5.6m questions

7.4m answers

Other Questions

_____ reminds customers and clients that they made a good choice in selecting a company with which to do business, or it reminds them of the good qualities of their purchase.​
On august 1 the darius co. purchased a photocopy machine for $8,000. the estimated annual depreciation on the machine is $1,680. if the company prepares annual financial statements on december 31, the
When president obama was elected, the u.s. economy was in trouble, and has slid into a recession. consumer spending was low and getting worse. in an effort to stop the decline, president obama proposed
Ensuring that an individual is who they claim to be is the function of _____. select one: a. confidentiality b. authorization c. availability d. authentication e. nonrepudiation
The current market price for good y is above the equilibrium price, and then the price of a subsitute good, x, increases. the demand curve for good y shifts as a result. what is the likely outcome of the
Link Copied!