The expected return for a stock calculated using the CAPM is 11.5%. The market return is 8.0% and the beta of the stock is 1.50.
Question
Solution 1
The question seems to be asking for the risk-free rate. The Capital Asset Pricing Model (CAPM) formula is:
Expected Return = Risk-free rate + Beta * (Market Return - Risk-free rate)
We can rearrange this formula to solve for the risk-free rate:
Risk-free rate = (Expected Return - Beta * Market Re Knowee AI is a powerful AI-powered study tool designed to help you to solve study problem.
Knowee AI is a powerful AI-powered study tool designed to help you to solve study problem.
Knowee AI is a powerful AI-powered study tool designed to help you to solve study problem.
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