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  For the asset shown in the following​ table, use the capital asset pricing model to find...

  For the asset shown in the following​ table, use the capital asset pricing model to find the required return.  ​

​Risk-free

​rate, Upper R Subscript Upper FRF

Market

​return, r Subscript mrm

​Beta, b
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7​%

13​%

1.3

The required return for the asset is

nothing ​___%

​(Round to two decimal​ places.)

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Answer #1

Risk free rate =   7%
Market return=   13%
Beta =   1.3
  
Required return as per CAPM = Risk free rate + (Beta*(Market Return-Risk free rate))  
7% + (1.3*(13% - 7%))  
14.80%  
  
So required return for the asset is 14.8%  

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