Homework Answers
| Calculation of required rate of return | |||||
| R = Rf+ B(Rm-Rf) | |||||
| Where, | |||||
| Rf = Risk Free Return | |||||
| B= Beta | |||||
| Rm = Market rate of return | |||||
| Rm-Rf= Risk Premium | |||||
| =0.051+1.8*(0.11-0.051) | |||||
| =0.051+1.8*(0.059) | |||||
| =15.72 % | |||||
| You earned greater than required rate of return on your portfolio. | |||||
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