# Expected and required returns

Risk free rate of 7% and market risk premium of 2 %. The best investment of these:

Expected Return of 9.01 / Beta 1.70

Expected Return of 7.06 / Beta 0.00

Expected Return of 5.04 / Beta -0.67

Expected Return of 8.74 / Beta 0.87

Expected Return of 11.50 / Beta 2.50

The 7.06 with Beta of 0.00 is best, but how do I calculate to find this that this is the best?

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#### Solution Preview

Risk free rate of 7% and market risk premium of 2 %. The best investment of these:

We compare the investments as follows

Expected Return of 9.01 / Beta 1.70 = 9.01/1.70= 8.42

Expected Return of ...

#### Solution Summary

In just four sentences, the solution provides explanations as well as answers on expected and required returns and beta.

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