The common stock of Peeta Inc. has an expected return of 15.0%, the risk-free rate is...
The common stock of Peeta Inc. has an expected return of 15.0%, the risk-free rate is 3.20%, and the market risk premium is 8.10% percent. What is the beta of Peeta's common stock?
0.94
1.08
1.31
1.46
Homework Answers
Ans 1.46
| Required Return = | Risk free Return + (Market Return - Risk free return)* Beta |
| Required Return = | Risk free Return + Market Risk Premium * Beta |
| 15.0% = | 3.20% + 8.10% * Beta |
| 15.0% - 3.20% = | 8.10% * Beta |
| Beta = | 11.80% / 8.10% |
| Beta = | 1.46 |
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