Question: The following data have been developed for Ding Corp. State Probability Market Return Company Return 1 0.1 -0.12 -0.24 2 0.3 0.03 0 3 0.4

The following data have been developed for Ding Corp.

State Probability Market Return Company Return
1 0.1 -0.12 -0.24
2 0.3 0.03 0
3 0.4 0.1 0.15
4 0.2 0.2 0.5

Assume that the risk-free rate is 3%. The convariance between Dink and the Market portfolio is 0.018408.

Find the required rate of return for Ding Corp using the Capital Asset Pricing Model (CAPM).

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