Based on the CAPM, a stock has a required return of 16%. The beta of the...
Based on the CAPM, a stock has a required return of 16%. The beta of the stock is 2.5 and the risk-free rate is 4%. What is the market risk premium? 12% 4.4% 8.8% 6.30% None of the above
Homework Answers
required return= risk-free rate+Beta*market risk premium
16=4+2.5*market risk premium
market risk premium=(16-4)/2.5
=4.8%
Hence the correct option is None of the above,
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Based on the CAPM, a stock has a required return of 16%. The beta of the...
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