Problem 2-3

Required Rates of Return

Suppose that the risk-free rate is 2.5% and that the market risk premium is 6%.

What is the required rate of return on a stock with a beta of 1.1? Round your answer to two decimal places.

___ %

What is the required rate of return on a stock with a beta of 0.8? Round your answer to two decimal places.

___ %

What is the required return on the market? Round your answer to two decimal places.

___ %