Your estimate of the market risk premium is 66%. The risk-free rate of return is 22%,...

Question

Question

Your estimate of the market risk premium is 66%. The risk-free rate of return is 22%, and General Motors has a beta of 1.5.

According to the Capital Asset Pricing Model (CAPM), what is its expected return?

A.

11%

B.

10.5%

C.

11.6%

D.

9.9%

Answer 1

Answer #1

Expected return = Risk free rate + Beta x market risk premium 11% 2%+(1.5*0.06)

Answer 2

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