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beta is 0.25. If the risk-free rate is 1.08%, and the market portfolio is expected to...

beta is 0.25. If the risk-free rate is 1.08%, and the market portfolio is expected to return 7.25%. What is the expected return on stock?

using calc

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Answer #1

Answer :

Beta = 0.25

Risk free rate = Rf = 1.08%

Market rate = Rm = 7.25%

Expected return = Rf + Beta ( Rm - Rf )

= 1.08% + 0.25 ( 7.25 - 1.08 ) = 2.6225%

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