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Capital Asset Pricing Model (CAPM) Risk Free rate Risk free rate (Rf) Beta (B)* Market risk premium* Expected return (ER) 1.10 10.20% In this scenario

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Capital Asset Pricing Model (CAPM) Risk Free rate Risk free rate (Rf) Beta (B)* Market risk premium* Expected return (ER) 1.10 10.20% In this scenario the Betals 1 1, the market risk premium s 7%, the expected return of the security is 102%. What is the risk free rate? Formula = (Beta * Market risk premium) + risk free rate = Expected return

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