if the risk-free rate of interest is 1.89%, the expected return of Shippo is 16.49% and...
Homework Answers
Expected return = Risk free rate + beta (market return - risk free rate)
0.1649 = 0.0189 + 1.81 (market return - 0.0189)
0.146 = 1.81 (market return - 0.0189)
0.080663 = market return - 0.0189
Market return = 0.099563 or 9.9563%
MRP = Market return - risk free rate
MRP = 9.9563% - 1.89%
MRP = 8.07%
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