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Calculating the required rate of return

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A company you are researching has common stock with a beta of 1.35. Currently, Treasury bills yield 2.5%, and the market portfolio offers an expected return of 11.5%. What is the required return on this common stock?

1. 10.93%
2. 11.86%
3. 21.43%
4. 14.65%

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Solution Summary

Solution describes the steps to calculate required rate of return in the given case.

Solution provided by:
Lokesh Jain, MSc
Education
  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
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