A stock has an expected return of 12.4 percent, its beta is 1.17, and the risk-free rate is 4.2 percent. What must the expected return on the market be?

Thank you for the opportunity to help you with your question!

Using CAPM A stock has an expected return of of 1.17%, the risk-free rate is 4.2%, and the market risk premium is 4.2%. What must the beta be?

return = risk free + beta * (market - risk free)

0.12.4 = 0.017 + x*(0.042)

0.085x = 0.057

x = about 0.6706

during calculation error may occure...plz reculaclute

Secure Information

Content will be erased after question is completed.

Enter the email address associated with your account, and we will email you a link to reset your password.

Forgot your password?

Sign Up