Consider the CAPM. The risk-free rate is 5%, and the expected return on the market is 17%. What is the expected return on a stock with a beta of 1.5?
A. 31%
B. 28%
C. 13%
D. 23%
Ans D) 23%
Expected Return = | Risk free Return + (Market Return - Risk free return)* Beta |
Expected Return = | 5%+ (17% - 5%) * 1.5 |
Expected Return = | 23% |
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