Question

Pearson MyLab & Mastering - 19 F Basic Financial Fin 301-01 (Fall 2019) Homework: Chapter 6 Homework 4 of 82 complete) Score:
0 0
Add a comment Improve this question Transcribed image text
Answer #1

a. Using the​ CAPM, the fair rate of return for Intel common stock is:

= Risk free rate + Beta(Expected market return - Risk free rate)

= 8% + 1.2(12% - 8%)

= 12.80%

b. The computed 12.80% is a fair rate because it compensates the investor for the time value of money and for assuming risk.

Add a comment
Know the answer?
Add Answer to:
Pearson MyLab & Mastering - 19 F Basic Financial Fin 301-01 (Fall 2019) Homework: Chapter 6...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT