Question

TPE Corp. has a beta of 1.4. The risk-free interest rate is 3.5 percent and the...

TPE Corp. has a beta of 1.4. The risk-free interest rate is 3.5 percent and the expected market risk premium is 6.5 percent. What is the required rate of return on TPE's stock?

9.1 percent

12.6 percent

11.4 percent

7.7 percent

10.0 percent

0 0
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Answer #1

Required return Rf Risk free rate Rm-Rf Market premium Rf+Beta*(Rm-Rf) 0.035+1.4*(0.065) 0.126 12.6%

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