Question
If the risk free rate is 5%, the expected return on the market portfolio is 12% and the beta of Stock B is 0.8, what
If the risk free rate is 5%, the expected return on the market portfolio is 12% and the beta of Stock B is 0.8, what is the required rate of return for Stock B according to the Capital Asset Pricing Model (CAPM)?
The answer is: 10.6
Please show me how to get to the correct solution of 10.6. Please show all work. Thank you.
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Financial Markets And Institutions
Authors: Jeff Madura
9th Edition
1439038848, 978-1439038840
