Assume that the risk-free rate is 7.5% and the required return on the market is 13%....

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Assume that the risk-free rate is 7.5% and the required return on the market is 13%. What is the required rate of return on a

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Answer 1

Answer #1

Required rate of return on the equity=Risk free rate + Beta*(Market return-Risk free rate)
Substituting the values, we get
Required rate of return=7.5% + 2*(13%-7.5%)=7.5% + 0.11=0.185=18.50%

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Answer 2

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