Hello tutor solve this question accounting Assume the market risk premium is 5%, the risk-free rate is 3%,and Amazon has a beta of 1.6. Using the Capital Asset PricingModel (CAPM), what is Amazon's expected return?A) 8.0%B) 11.0%C) 12.5%D) 10.0%

The Capital Asset Pricing Model (CAPM) formula is:E(R) = Rf + β (Rm - Rf)Where:E(R) = Expected…

Answered: Assume the market risk premium is 5%,…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Capital asset pricing model (CAPM) For the asset shown in the following table, use the capital asset pricing model to find the required return. (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Risk-free rate, RF 5% Market return, m 10% ****** The required return for the asset is%. (Round to two decimal places.) Beta, b 0.6

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Assume the market risk premium is 5%, the risk-free rate is 3%, and Amazon has a beta of 1.6. Using the Capital Asset Pricing Model (CAPM), what is Amazon's expected return? A) 8.0% B) 11.0% C) 12.5% D) 10.0%