Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

21. A stock has an expected return of 22 percent (according to the CAPM theory), and a beta of 1:6. The expected return on the

21. A stock has an expected return of 22 percent (according to the CAPM theory), and a beta of 1:6. The expected return on the market is 16 percent. What must the risk-free rate be?

(a) 4%

(b) 5%

(c) 6%

(d) 7%

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Structured Finance Leveraged Buyouts Project Finance Asset Finance And Securitization

Authors: Charles-Henri Larreur

1st Edition

1119371104, 978-1119371106

More Books

Students also viewed these Finance questions