# finance

Based on the following information, calculate the required return based on the CAPM:
Risk Free Rate = 3.5%
Market Return =10%
Beta = 1.08

1. 👍 0
2. 👎 0
3. 👁 65
1. r= 3.5+1.08(10-3.5)

1. 👍 0
2. 👎 0

## Similar Questions

1. ### finance

A stock has a beta of 2.0. A security analyst who specializes in studying this stock expects its return to be 24%. Suppose the risk-free rate is 6 percent and the market-risk premium is 10 percent. Is the stock overvalued or

asked by j on December 8, 2014
2. ### Finance Class Help (very very urgent) need asap

K this is what I have so far. I am wondering if i did the CAPM right and if that is all i need for that part and then I need to know how to do the Constant Growth Model. When you do yours, assume the risk-free return as 6% Assume

asked by Heidi on October 28, 2008
3. ### Managerial Finance

Assume that investors have recently become more risk averse, so the market risk premium has increased. Also, assume that the risk-free rate and expected inflation have not changed. Which of the following is most likely to occur?

asked by Alex on January 30, 2011
4. ### Finance

IBM's common stock has a beta of 0.85. If the expected risk-free return is 4.5% and the market risk premium is 7%. a) Calculate IBM’s required rate of return (10pts) b) Assume IBM’s actual realized return is 15%. Calculate its

asked by Anonymous on November 28, 2011
5. ### Finance

One way to think about the required rate of return is: as the highest return a risk-averse investor wants from an investment. as the risk-free rate of return plus a risk premium. as the historical rate of return plus a risk

asked by Jasmine on July 21, 2013
6. ### finance

Based on the following information, calculate the coefficient of variation and select the best investment based on the risk/reward relationship. Std Dev. Exp. Return Company A 10.4 15.2 Company B 14.6 22.9

asked by jose on July 7, 2013
7. ### Finance

Consider the following information and calculate the required rate of return for the Winkler Investment Fund. The total investment fund is \$2 million. Stock Investment Beta ----- ---------- ---- A \$ 200,000 1.50 B 300,000 -0.50 C

8. ### Finance

Calculate the required rate of return for Mercury Inc. to the nearest .1 Assume that investors expect a 3.0 percent rate of inflation in the future. The real risk-free rate is equal to 5.8 percent and the market risk premium is

asked by Lisa on June 4, 2013
9. ### Finance

Currently the risk-free rate equals 5% and the expected return on the market portfolio equals 11%. An investment analyst provides you with the following information: Stock beta Expected return A 1.33 12% B 0.7 10% C 1.5 14% D 0.66

asked by MIchael on April 25, 2018
10. ### Finance

Aset P has a beta of 0.9. The risk-free rate of return is 8%, while the return on the S&P 500 is 14%. Asset P's required rate of return is:

asked by Melissa on June 17, 2012

More Similar Questions