Check my work Check My Work button is now enabledItem 6Item 6 10 points A stock...
Check my work Check My Work button is now enabledItem 6Item 6 10 points A stock has an expected return of 11.4 percent, the risk-free rate is 3.7 percent, and the market risk premium is 6.8 percent. What must the beta of this stock be?
Homework Answers
| Expected return = Risk free rate + ( Beta * Market risk premium ) | |
| 11.4% = 3.7% + ( Beta * 6.8% ) | |
| 11.4% - 3.7% = Beta * 6.8% | |
| 7.7% = Beta * 6.8% | |
| Beta = 7.7% / 6.8% | 1.13 |
| Note : In the absence of information regarding rounding off, the answer is rounded off to 2 decimal places. | |
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