Question

Use the security market line to determine the required rate of return for the following​ firm's...

Use the security market line to determine the required rate of return for the following​ firm's stock. The firm has a beta of​ 1.20, the required return in the market place is​ 10.00%, and the

riskminus−free

rate of return is​ 1.50%.

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Answer #1

As Per CAPM Rf Risk free return. Market return Required Return Rm Rf+Beta*(Rm-Rf) 0.0150+1.20*10.10-0.0150) 0.1170 11.70%

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