Assume the expected return on the market is 11 percent and the risk-free rate is 4 percent

Finance Nov 24, 2020

Assume the expected return on the market is 11 percent and the risk-free rate is 4 percent. (a 1) X Your answer is incorrect. What is the expected return for a stock with a beta equal to 2.00? (Round answers to 2 decimal places, e.g. 0.25.) Expected return 18

Expert Solution

Expected Return as per CAPM = Risk Free Rate + Beta(Return on market - Risk Free Rate)

= 4% + 2(11% - 4%)

= 18%

The correct answer is 0.18

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