Expected return=risk free rate+beta*(market rate-risk free rate)
10.2=risk free rate+0.91*(10.8-risk free rate)
10.2=risk free rate+9.828-0.91*risk free rate
risk free rate=(10.2-9.828)/(1-0.91)
=4.13%(Approx).
7. 16. Using CAPM. A stock has an expected return of 10.2 percent and a beta...
16. Using CAPM A stock has an expected return of 10.2 percent and a beta of .91, and the expected return on the market is 10.8 percent. What must the risk-free rate be?
14. Using CAPM (L01, 4) A stock has an expected return of 10.2 percent, the risk-free rate is 4.1 percent, and the market risk premium is 7.2 percent. What must the beta of this stock be?
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5. 14. Using CAPM. 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?
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