Question

FIANCE 50 HELP ASAP

Calculate the required return for a Company Z that has a beta of 1.4 if the market risk premium is 9% and the risk-free rate is 4%.

Answer 1

Calculate the risk measure (beta) compared to the returns of asset and market premium.

1.4 = 4 + 9((rm^-4)

1.4 = 9rm ^-32

33.4 = 9rm

Rm = 3.71

The answer is 3.71