Your estimate of the market risk premium is 7%. The risk-free rate of return is 3.5% and General Motors has a beta of 1.3. According to the Capital Asset Pricing Model (CAPM), what is its expected return? A. 12.6% B. 13.2% C. 12% D. 11.3%

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
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Your estimate of the market risk premium is 7%. The risk-free rate of return is 3.5% and General Motors has a beta of 1.3. According to the Capital Asset Pricing
Model (CAPM), what is its expected return?
A. 12.6%
B. 13.2%
C. 12%
D. 11.3%
Transcribed Image Text:Your estimate of the market risk premium is 7%. The risk-free rate of return is 3.5% and General Motors has a beta of 1.3. According to the Capital Asset Pricing Model (CAPM), what is its expected return? A. 12.6% B. 13.2% C. 12% D. 11.3%
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