A stock has an expected return of 15 percent, its beta is 1.3, and the expected...

Question

Question

A stock has an expected return of 15 percent, its beta is 1.3, and the expected return on the market is 13 percent. What must

Answer 1

Answer #1

As per CAPM

expected return = risk-free rate + beta * (expected return on the market - risk-free rate)

15 = Risk free rate% + 1.3 * (13 - Risk free rate%)

Risk free rate% = 6.33

Answer 2

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