Question
The historical returns for the past three years for Stock B and the stock market portfolio are: Stock B: 24%, 0%, 24%; Market portfolio: 10%,
The historical returns for the past three years for Stock B and the stock market portfolio are: Stock B: 24%, 0%, 24%; Market portfolio: 10%, 12%, 20%. Calculate the required rate of return (cost of equity) for Stock B using the CAPM. (The risk-free rate of return = 4%.)
A.8.6%
B.12.6%
C.14.3%
D. 16.0%
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Financial Markets And Institutions
Authors: Jeff Madura
6th Edition
0324162618, 978-0324162615
