# Required rate of return

Assume that the risk-free rate is 5% and the market risk premium is 6%, what is the expected return for the overall stock market? What is the required rate of return that has a beta of 1.2?

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#### Solution Preview

The return can be calculated using the CAPM equation

Expected return = Rf + (Rm-Rf) ...

#### Solution Summary

The solution explains how to calculate the required rate of return given the beta

$2.19