Explore BrainMass
Share

Calculating required rate of return

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

An analyst has modeled the stock of Crisp Trucking using a two-factor APT model. The risk-free rate is 6%, the expected return on the first factor (r1) is 12%, and the expected return on the second factor (r2) is 8%. If bi1 = 0.7 and bi2 = 0.9, what is Crisp's required return?

© BrainMass Inc. brainmass.com March 21, 2019, 8:55 pm ad1c9bdddf
https://brainmass.com/business/business-math/354170

Solution Preview

Risk free rate=rf=6%
Expected return on factor 1=r1=12%
Expected return on factor ...

Solution Summary

Solution describes the steps to calculate the required rate of return using two-factor APT model.

$2.19