Problem 6-07
Required Rate of Return
Suppose rRF = 4%, rM = 9%, and rA = 12%.
1.required return= risk-free rate +Beta*(market rate- risk-free rate )
12=4+Beta*(9-4)
Beta=(12-4)/(9-4)
=1.6
2.required return= risk-free rate +Beta*(market rate- risk-free rate )
=4+1.7*(9-4)
=12.5%
Problem 6-07 Required Rate of Return Suppose rRF = 4%, rM = 9%, and rA =...
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