The cost of equity for Ryan Corporation is 8.4%. If the expected return on the market...

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The cost of equity for Ryan Corporation is 8.4%. If the expected return on the market is 10% and the risk-free rate is 5%, then beta is ______?

Answer 1

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Answer #1

1.Calculation of Beta using CAPM approach :

Cost of equity of stock = Risk free rate of return + Beta (market rate of return - Risk free rate of return)

8.4%= 5% + Beta (10% - 5%)

8.4% - 5%= Beta (5%)

5%Beta = 3.4%

Beta = 3.4% / 5% =0.68

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Answer 2

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