The expected return on JK stock is 13.60 percent while the expected return on the market...

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The expected return on JK stock is 13.60 percent while the expected return on the market...

The expected return on JK stock is 13.60 percent while the expected return on the market is 11.0 percent. The beta of JK stock is 1.4. What is the risk-free rate of return?

3.40 percent

4.00 percent

3.10 percent

4.50 percent

4.90 percent

business finance

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Answer 1

Answer #1

Risk free rate of return (Rf) Rs-BxRm) (1-B) Here, Required rate of return (Rs) Beta of the stock (B) Market return (Rm) 13.60% 1.40 11.00% Risk free rate of return (Rf) 4.50% (13.6%-1.4x11%)/(1-140)

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Answer 2

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The expected return on JK stock is 15.78 percent while the expected return on the market...

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