Centex Energy has a beta of 1.47. Assume that risk-free rate and the expected rate of return on the market are 2% and 12% respectively. According to the capital asset pricing model (CAPM), what is the expected rat of return for this company's stock?

Centex Energy has a beta of 1.47. Assume that risk-free rate and the expected rate of return on the market are 2% and 12% respectively. According to the capital asset pricing model (CAPM), what is the expected rat of return for this company's stock?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter2: Risk And Return: Part I

Section: Chapter Questions

Problem 4P: An analyst has modeled the stock of a company using the Fama-French three-factor model. The market...

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Centex Energy has a beta of 1.47. Assume that risk-free rate and the expected rate of return on the market
are 2% and 12% respectively. According to the capital asset pricing model (CAPM), what is the expected rate
of return for this company's stock?
Your answer should be between 11.45 and 18.55, rounded to 2 decimal places, with no special characters.

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