Question: please answer it right, part 2 needed Problem 17 Intro A stock has a beta of 1.5. The risk-free rate is 4%. Assume that the
Problem 17 Intro A stock has a beta of 1.5. The risk-free rate is 4%. Assume that the CAPM holds. Part 1 IB Attempt 1/10 for 10 pts. What is the expected return for the stock if the expected return on the market is 6%? 0.07 Correct Using the CAPM: E(R) = 1; + B(E(RM) - ) = 0.04 + 1.5(0.06 -0.04) = 0.07 Part 2 IB Attempt 1/10 for 10 pts. What is the expected return for the stock if the expected market risk premium is 6%? 3+ decimals
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