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A stock has a beta of 0.95, the expected return on the market is 13.25, and the risk-free rate is 3.66. What must the expected return on this stock be?

Respuesta :

Answer:

12.7705%

Explanation:

We can calculate expected return on the stock by expected return formula

Formula: Expected Return = Risk free rate + beta x (market rate - risk free rate)

Expected Return = 3.66 + 0.95(13.25-3.66)

Expected Return = 3.66 + 9.1105

Expected Return  = 12.7705%

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