Ha9missaboo Ha9missaboo

07-03-2017
Business

contestada

The risk-free rate of return is 5.2 percent and the market risk premium is 8.4 percent. what is the expected rate of return on a stock with a beta of 1.34?

Respuesta :

Tiny4lurv Tiny4lurv

07-03-2017

Beta is a measure of how much riskier an asset's systematic risk is in comparison to the market. In this case, it is 1.34 times.

Thus expected return = 5.2 + 1.34(8.4)=16.456

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