Question

Monroe McIntyre has estimated the expected return for Bruehl Industries to be 10.50%. He notes the risk-free rate is 2.10% and the return of the market is 11.40%. Based on this information, he estimates Bruehl's beta to be:

Answer 1

0.74

Step-by-step explanation:

According to CAPM ;

Required return = risk free rate + (beta x return on the market)

10.50% = 2.10% + beta x 11.40%

(10.50% - 2.10%) / 11.40% = beta

beta = 0.74