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current market conditions are such that the risk-free rate is 2%, the market risk premium is 10% and Firm A's Beta is 1.25, required return
current market conditions are such that the risk-free rate is 2%, the market risk premium is 10% and Firm A's Beta is 1.25,
required return = risk free rate + (beta * market risk premium)
required return = 2% + (1.25 * 10%) = 14.50%
If Firm B is less volatile than the market, and has a Beta of 0.5, what would be its required return in the same market conditions as listed above?
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