Question

P 12-28 (book/static) Suppose the risk-free return is 4.0% and the market portfolio has an expected return of 10.0% and a standard deviation of 16%, Johnson & Johnson Corporation stock has a beta of 0.32 what is its expected return? The expected return i%. (Round to two decimal places.)

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Answer #1

Expected return= risk-free rate +Beta*(market rate- risk-free rate )

=4+0.32*(10-4)

which is equal to

=5.92%

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