Question: Let's try using he Capital Asset Pricing Model to calculate the investor's required rate of return If the risk free rate (Treasury Rate or Rf)

Let's try using he Capital Asset Pricing Model to calculate the investor's required rate of return

If the risk free rate (Treasury Rate or Rf) is 5%, and the long run market rate (Rm) is 8%, and the beta for a company is 1.5, calculate the investor's required rate of return for a stock using the Capital Asset Pricing Model.

a. 5.00%

b. 12.50%

c. 23.50%

d. 65.00%

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