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The table below shows information for 3 stocks. Security Beta Stock 1 1.9 Stock 2 1.2 Stock 3 0.2 The risk-free rate is 4.5% and
The table below shows information for 3 stocks.
Security | Beta |
---|---|
Stock 1 | 1.9 |
Stock 2 | 1.2 |
Stock 3 | 0.2 |
The risk-free rate is 4.5% and the required return for the market portfolio is 7%. Calculate the required return for each stock, using the Capital Asset Pricing Model (CAPM).
Part 1
What is the required return for stock 1? (3+ decimals)
Part 2
What is the required return for stock 2? (3+ decimals)
.
Part 3
What is the required return for stock 3? (3+ decimals)
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