Question
Stock A's stock has a beta of 1.30, and its required return is 16.00%. Stock B's beta is 0.80. If the risk-free rate is 4.75%,
Stock A's stock has a beta of 1.30, and its required return is 16.00%. Stock B's beta is 0.80. If the risk-free rate is 4.75%, what is the required rate of return on B's stock? (Hint: First find the market risk premium.)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
finding the required rate of return on Stock B using the Capital Asset Pricing Model CAPM Steps to s...
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Managerial Economics
Authors: Paul Keat, Philip K Young, Steve Erfle
7th edition
0133020266, 978-0133020267
