Explore BrainMass

Explore BrainMass

    Calculate return required stock

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    An analyst has modeled the stock of a company using the Fama-French three-factor model. The risk-free rate is 5%, the required market return is 10%, the risk premium for small stocks (rSMB) is 3.2%, and the risk premium for value stock (rHML) is 4.8%. If ai = 0, bi = 1.2, ci = -0.4, and di = 1.3, what is the stock's required return?

    Text book answer is : 15.96%

    © BrainMass Inc. brainmass.com June 4, 2020, 12:50 am ad1c9bdddf

    Solution Summary

    This post shows how to calculate return required stock