Please help with the following problem.
I am not sure how to approach this one. I am trying to solve the problem in Excel. Please help with the formula(s) for this problem and how to solve in Excel.
Calculate the required rate of return for Mars Inc.'s stock. The Mars's beta
is 1.2, the rate on a T-bill is 4 percent, the rate on a long-term T-bond is 6
percent, the expected return on the market is 11.5 percent, the market has
averaged a 14 percent annual return over the last six years, and Mars has
averaged a 14.4 return over the last six years.
You need to use the CAPM equation to get the answer
Required Rate of Return = Risk free rate + (Expected ...
The solution explains how to calculate the required rate of return on a stock.