Given the following information, determine the beta coefficient for Stock L that is consistent with equilibrium: r

Question:

Given the following information, determine the beta coefficient for Stock L that is consistent with equilibrium: r̂ _L = 10.5%; r_RF = 3.5%; r_M = 9.5%.

Beta Coefficient
Beta coefficient is a measure of sensitivity of a company's stock price to movement in the broad market index. It is an indicator of a stock's systematic risk which is the undiversifiable risk inherent in the whole financial system. Beta coefficient...