Assume that the risk-free rate is 7% and the required return on the market is 8%

Finance Oct 23, 2020

Assume that the risk-free rate is 7% and the required return on the market is 8%. What is the required rate of return on a stock with a beta of 1.9? Round your answer to two decimal places

Expert Solution

Risk-free rate = 7%

Beta = 1.9

Market rate= 8%

Required Return = risk-free rate +Beta*(market rate- risk-free rate)

= 7% +1.9*(8%-7%)

Required Return = 8.90%

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