Stock D has a beta of 2. The risk-free rate of return is 4%, and the...
Stock D has a beta of 2. The risk-free rate of return is 4%, and the market return is 8%. Given this information, calculate the required rate of return for Stock D.
Homework Answers
Required rate of return = Risk-free rate + Beta(Market return - Risk-free rate)
Required rate of return = 0.04 + 2(0.08 - 0.04)
Required rate of return = 0.12 or 12%
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