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A stock has an expected return of 12.00%. The risk-free rate is 2.13% and the market risk premium is 5.88%. What is the...

A stock has an expected return of 12.00%. The risk-free rate is 2.13% and the market risk premium is 5.88%. What is the β of the stock?

A stock has an expected return of 17.00%. The risk-free rate is 2.14% and the market risk premium is 8.82%. What is the β of the stock?

Answer format: Number: Round to: 2 decimal places.

Please show all work if possible. Answer both examples for a thumbs up. Thank you.

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Answer #1

Expected rate=risk free rate+Beta*market risk premium

a.

12=2.13+Beta*5.88

Beta=(12-2.13)/5.88

=1.68(Approx).

b.

17=2.14+Beta*8.82

Beta=(17-2.14)/8.82

=1.68(Approx).

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