A stock has an expected return of 13.2 percent, the risk-free rate is 6 percent, and...
A stock has an expected return of 13.2 percent, the risk-free rate is 6 percent, and the market risk premium is 10 percent. What must the beta of this stock be? (Do not round intermediate calculations. Round your answer to minimum 2 decimal places, e.g., 32.16.)
______
Hint: Solve for beta from the formula ER = RF + BETA x (RM - RF) where MRP=RM-RF
Homework Answers
ER = RF + BETA x (RM - RF)
13.2%=6%+BETA*10%
BETA=(13.2%-6%)/10%
=0.72 IS ANSWER
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