Question: Problem 11-16 Using CAPM [LO 4] A stock has an expected return of 12.7 percent and a beta of 1.18, and the expected return on

Problem 11-16 Using CAPM [LO 4]

A stock has an expected return of 12.7 percent and a beta of 1.18, and the expected return on the market is 11.7 percent.

Required:

What must the risk-free rate be? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)

Risk-free rate

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