A firm’s beta is 1.5. The expected market return is 5%, risk-free rate is assumed to be 1% constant. What is the expected return of the firm using CAPM?
expected return=risk free rate+beta*(market rate-risk free rate)
=1+1.5*(5-1)
which is equal to
=7%
A firm’s beta is 1.5. The expected market return is 5%, risk-free rate is assumed to...
(CAPM) A firm has a beta of 1.5. If expected market return is 5.5% and risk-free rate is 2%, what is the cost of equity? Show formula and work by hand-only. Do not use excel.
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