None Alpha Solutions Inc. has a stock with a beta of 1.25. The expectedreturn on the market is 14.5%, and the risk-free rate is 6.8%. Whatmust be the expected return on this stock?

Calculation:E(R) = 6.8% + 1.25(14.5% − 6.8%) E(R) = 6.8% + 1.25(7.7%) E(R) = 6.8% + 9.625% E(R) =…

Answered: Alpha Solutions Inc. has a stock with a…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 14P

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Alpha Solutions Inc. has a stock with a beta of 1.25. The expected return on the market is 14.5%, and the risk-free rate is 6.8%. What must be the expected return on this stock?