Question

Zacher Co.'s stock has a beta of 1.48, the risk-free rate is 4.25%, and the market risk premium is 5.50%. What is the firm's required rate of return

Answer 1

11.95

Step-by-step explanation:

The firm required rate of return can be calculated by multiplication of the risk-free rate with the addition of BETE VALUE OF THE STOCK and MARKET RISK PREMIUM which is done Bellow

the risk-free rate =4.25%,

beta = 1.48,

market risk premium =5.50%

The firm required rate of return= 4.25%+[(1.4×5.5)]

=11.95%