Homework Answers
Given:
Rs: Stock return: 13.5%
Rf: Risk free return: 5.25%
Rm: Market return: 13%
Beta:
Answer:
As per CAPM: Rs = Rf+(beta*[Rm-Rf])
13.5% = 5.25%+(Beta*(13%-5.25%))
13.5%-5.25%=Beta*7.75%
Beta=1.06
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