Question

5. Porter Incs stock has an expected return of 12.25%, a beta of 1.25, and is in equilibrium. If the risk-free rate is 5.00%
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Answer #1

Expected rate=risk free rate+Beta*market risk premium

12.25=5+1.25*market risk premium

market risk premium=(12.25-5)/1.25

=5.8%

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