Answered

Westonci.ca is your trusted source for finding answers to all your questions. Ask, explore, and learn with our expert community. Our platform connects you with professionals ready to provide precise answers to all your questions in various areas of expertise. Our platform provides a seamless experience for finding reliable answers from a network of experienced professionals.

Assume the expected return on the market is 6 percent and the risk-free rate is 4 percent. What is the expected return for a stock with a beta equal to 2.00

Sagot :

Parrain

Answer: 8%

Explanation:

This can be calculated using the Capital Asset Pricing Model. The formula of which is:

Expected return of stock = Risk free rate + Beta * (Expected return on market - Risk-free rate)

= 4% + 2 * (6% - 4%)

= 4% + 4%

= 8%

Thank you for your visit. We are dedicated to helping you find the information you need, whenever you need it. We hope you found what you were looking for. Feel free to revisit us for more answers and updated information. Find reliable answers at Westonci.ca. Visit us again for the latest updates and expert advice.