Yahoo finance reports a beta of 1.1 fora stock. If the risk free rate is 1.0% and fhe expected market risk premium is 7.5 what is the stock expected return accordin yo the CAPM? A 8.7 B 8.9 c 9.6 d 10.1 E 9.3

Yahoo finance reports a beta of 1.1 fora stock. If the risk free rate is 1.0% and fhe expected market risk premium is 7.5 what is the stock expected return accordin yo the CAPM? A 8.7 B 8.9 c 9.6 d 10.1 E 9.3

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question

Yahoo finance reports a beta of 1.1 fora stock. If the risk free rate is 1.0%

and fhe expected market risk premium is 7.5 what is the stock expected

return accordin yo the CAPM?

A 8.7

B 8.9

c 9.6

d 10.1

E 9.3

Definition Definition Model that illustrates the correlation between the expected return and risk of capital investment in stock. According to this model, the expected rate of return on equity is equal to the risk-free return added to a risk premium, which is based on the stock beta.

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