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?
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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
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