# Question: The current risk free rate of return rRF is 4 percent

The current risk-free rate of return, rRF, is 4 percent and the market risk pre-mium, RPM, is 5 percent. If the beta coefficient associated with a firm's stock is 2.0, what should be the stock's required rate of return?

## Answer to relevant Questions

Why is it important for business students to study finance even if the topic is not their major?If the risk-free rate of return, rRF, is 4 percent and the market return, rM, is expected to be 12 percent, what is the required rate of return for a stock with a beta, 13, equal to 2.5?What shape would be the probability distribution have for (a) completely certain returns and (b) complete uncertain returns?Of the $10,000 invested in a two-stock portfolio, 30 percent is invested in Stock A and 70 percent is invested in Stock B. If Stock A has a beta equal to 2.0 and the beta of the portfolio is 0.95, what is the beta of Stock BWhat impact do investors’ expectations about inflation have on a firm’s cost of debt? Is the firm’s cost of equity affected? Explain.Post your question