Assume the current risk free rate is 2%. and the equity market risk premium is 6.25%. Also, consider two companies. The first has a Beta of 1.5; the second - Washington Electric has a beta of .85.  what is the expected return on the market?  will either or both of these companies have an expected return greater than the market. Explain your answer.

Answer rating: 100% (QA)

To calculate the expected return on the market we use the Capital Asset Pricing Model CAPM formula t... View the full answer