Question

Assume that the risk-free rate is 3.5% and the required return on the market is 12%. What is the required rate of return on a stock with a beta of 2? Round your answer to two decimal places.

Answer 1

Ans 20.50%

Required Return =	Risk free Return + (Market Return - Risk free return)* Beta
Required Return =	3.5% + (12% - 3.5%)*2
Required Return =	20.50%