portfolio question for finance 3

User Generated

yrfyvrpnthva

Business Finance

Description

Question 3

King Farm Manufacturing Company’s common stock has a beta of 1.36. If the risk-free rate is 3.70 percent, and the market return is 8.83 percent, calculate the required return on King Farm Manufacturing’s common stock.

Round the answers to two decimal places in percentage form.

User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service.

Explanation & Answer

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

require return rate = risk free return +beta*(market return - risk free return) = 0.0370+1.36*(0.0883-0.037)  =10.68%

Please let me know if you need any clarification. I'm always happy to answer your questions.


Anonymous
Really helped me to better understand my coursework. Super recommended.

Studypool
4.7
Trustpilot
4.5
Sitejabber
4.4

Related Tags