The risk-free rate of return is 3.68 percent and the market risk premium is 7.84 percent. What is the expected rate of return on a stock with a beta of 1.32?

Question

The risk-free rate of return is 3.68 percent and the market risk premium is 7.84 percent. What is the expected rate of return on a stock with a beta of 1.32?
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Solution 1

The expected rate of return on a stock can be calculated using the Capital Asset Pricing Model (CAPM), which is expressed as:

Expected Return = Risk-Free Rate + Beta * Market Risk Premium

Given in the problem, we have:

Risk-Free Rate (Rf) = 3.68% Beta (β) = 1.32 Market Risk Premium (Rm-Rf) = 7.84 Knowee AI StudyGPT is a powerful AI-powered study tool designed to help you to solve study prob

Knowee AI StudyGPT is a powerful AI-powered study tool designed to help you to solve study problem.
Knowee AI StudyGPT is a powerful AI-powered study tool designed to help you to solve study problem.
Knowee AI StudyGPT is a powerful AI-powered study tool designed to help you to solve study problem.
Knowee AI StudyGPT is a powerful AI-powered study tool designed to help you to solv

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