Answer:
The expected return = 10.739.
Explanation:
Given risk-free rate of return = 2.3 per cent
Market expected return = 12 percent
The value of beta = 0.87
Use the below formula to find the expected return.
The expected return = Risk free rate of return + Beta × (Market expected return - risk free rate of return)
The expected return = 2.3 + 0.87 (12 – 2.3)
The expected return = 10.739
