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A stock has an expected return of 14 percent, its beta is 1.60, and the risk-free rate is 4.8 percent. What must the expected return on the market be? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Respuesta :

kashif9462675

Answer:

Expected Market Return = 10.55%

Explanation:

Using CAPM equation

Required rate of return = Rf + (Rm - Rf) x Beta

14% = 4.8% + (Rm - 4.8%) x 1.6

14% - 4.8% = 1.6 Rm - 7.68%

9.2% + 7.68% =  1.6 Rm

16.88% = 1.6 Rm

Rm = 16.88% / 1.6

Rm = 10.55%

nutanraj654

Expected Market Return = 10.55%.

How do you round a percent to two decimal places?

(1) For rounding up percentage values to two decimal places, please apply this formula =ROUNDUP(C2,4); (2) For rounding down percentage values to two decimal places, please apply this formula =ROUNDDOWN(C2,4); (3) For rounding percentage values to N decimal places, please apply this formula =ROUND(C2, N+2).

What is a percentage value with 2 digits after the decimal point?

99.99 is the percentage value with 2 digits after the decimal point for graduate. here. 99 are the two numbers after the decimal point.

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