Financial accounting Consider the CAPM. The risk-free rate is 5%and the expected return on the market is15%. What is the beta on a stock with anexpected return of 12%?a) 0.5b) 0.7c) 1.2d) 1.4

Where:Given:Risk-Free Rate = 5% (0.05)Market Return = 15% (0.15)Expected Return = 12% (0.12)Step 1:…

Answered: Consider the CAPM. The risk-free rate…

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter6: Risk And Return

Section: Chapter Questions

Problem 14P

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Consider the CAPM. The risk-free rate is 5% and the expected return on the market is 15%. What is the beta on a stock with an expected return of 12%? a) 0.5 b) 0.7 c) 1.2 d) 1.4