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A stock has an expected return of 11.89 percent and its reward-to-risk ratio is 7.4 percent. If the risk-free rate is 3 percent, what is the stock's beta?
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A stock has an expected return of 11.89 percent and its reward-to-risk ratio is 7.4 percent. If the risk-free rate is 3 percent, what is the stock's beta?

User Bill Campbell
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2 votes

Answer:

1.20

Step-by-step explanation:

According to CAPM

expected return = risk free rate + (beta x reward to risk ratio)

11.89% = 3% + 7.4% x beta

beta = 1.20

User Danamarie
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