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According to the capital asset pricing (CAPM) model, what return should you require for a security with a beta of 1.8, if the

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Answer #1
Given,
Beta of stock 1.8
Risk free rate (Rf) 3%
Market return (Rm) 11.40%
We know,
As per CAPM,
Required rate of return= Rf+(Rm-Rf)*Beta
Where,
Rf= risk free rate
Rm= market return
Required rate of return=3%+(11.4%-3%)*1.8 18.12%
Answer= 18.12%
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