What is the expected market return if the expected return on asset X is 20 percent,...

Question

Question

What is the expected market return if the expected return on asset X is 20 percent, its beta is 1.5, and the risk free rate is 5 percent?

Answer 1

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Answer #1

(expected market return-5%)*1.5 + 5% = 20%

expected market return = (20% -5%)/1.5 + 5% = 15.00%
expected market return =15.00%

Answer 2

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