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The beta of Ridgeway Corp. stock is 1.5, whereas the risk- free rate of return is 6% (0.06). If the expected return on the market is 14% (0.14), what should investors expect as a return on Ridgeway Corp.'s stock?

The beta of Ridgeway Corp. stock is 1.5, whereas the risk- free rate of return is 6% (0.06). If the expected return on the market is 14% (0.14), what should investors expect as a return on Ridgeway Corp.'s stock?

EBK CONTEMPORARY FINANCIAL MANAGEMENT
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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What should investor's expect as a return on this financial accounting question?

The beta of Ridgeway Corp. stock is 1.5, whereas the risk- free rate of return is 6% (0.06). If the expected return on the market is 14% (0.14), what should investors expect as a return on Ridgeway Corp.'s stock?
Transcribed Image Text:The beta of Ridgeway Corp. stock is 1.5, whereas the risk- free rate of return is 6% (0.06). If the expected return on the market is 14% (0.14), what should investors expect as a return on Ridgeway Corp.'s stock?
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