Answered

Welcome to Westonci.ca, the place where your questions are answered by a community of knowledgeable contributors. Join our Q&A platform to connect with experts dedicated to providing precise answers to your questions in different areas. Get quick and reliable solutions to your questions from a community of experienced experts on our platform.

If IBM has a beta of 1.2 when the risk-free rate is 6% and the expected return on the market portfolio is 18%, the expected return on IBM is:

Sagot :

abiolataiwo2015

Answer:

20.4%

Explanation:

Calculation to determine what the expected return on IBM is:

Using this formula

E(Ribm)=Risk-free rate+(Market portfolio -Risk-free rate) Beta

Let plug in the formula

E(Ribm) = 6% +(18%-6%)1.2

E(Ribm)=6%+12%(1.2)

E(Ribm)=6%+14.4%

E(Ribm)=20.4%

Therefore the expected return on IBM is:20.4%

Thank you for trusting us with your questions. We're here to help you find accurate answers quickly and efficiently. Thanks for using our service. We're always here to provide accurate and up-to-date answers to all your queries. Westonci.ca is your trusted source for answers. Visit us again to find more information on diverse topics.