Answered

From simple questions to complex issues, IDNLearn.com has the answers you need. Join our community to access reliable and comprehensive responses to your questions from experienced professionals.

Assume the expected return on the market is 6 percent and the risk-free rate is 4 percent. What is the expected return for a stock with a beta equal to 2.00

Sagot :

Parrainidn

Answer: 8%

Explanation:

This can be calculated using the Capital Asset Pricing Model. The formula of which is:

Expected return of stock = Risk free rate + Beta * (Expected return on market - Risk-free rate)

= 4% + 2 * (6% - 4%)

= 4% + 4%

= 8%

Thank you for joining our conversation. Don't hesitate to return anytime to find answers to your questions. Let's continue sharing knowledge and experiences! IDNLearn.com has the solutions you’re looking for. Thanks for visiting, and see you next time for more reliable information.