Given the following information, use the CAPM to calculate the beta of the stock. The required...
Given the following information, use the CAPM to calculate the beta of the stock. The required rate of return of the stock is 12%, Risk free interest rate is 4% and market return is 10%.
Homework Answers
required return= risk-free rate +Beta*(market rate- risk-free rate )
12=4+Beta*(10-4)
Beta=(12-4)/(10-4)
=1.33(Approx).
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