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a company has a beta of 3.25. if the market return is expected to be 14 percent and the risk-free rate is 5.5 percent, what is the company's required return?

Sagot :

abiolataiwo2015

If a company has a beta of 3.25. if the market return is expected to be 14 percent and the risk-free rate is 5.5 percent, the company's required return is 33.13%.

How to find the Required rate of return?

Using this formula to find the Required rate of return

Required rate of return = Risk-free rate + (Market return - Risk-free rate) x beta

Where:

Risk-free rate = 5.5%

Market return = 14%

beta = 3.25

Let plug in the formula

Required rate of return = 5.5% + (14% - 5.5%) x 3.25

Required rate of return = 5.5% + 8.5% x 3.25

Required rate of return = 5.5% + 27.625%

Required rate of return = 33.125%

Required rate of return = 33.13% (Approximately)

Therefore the Required rate of return is 33.13%.

Learn more about Required rate of return here:https://brainly.com/question/24301559

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