The 30 year treasury bond market rate is 5%, the stock market premium is 6%, and a company's beta is 1.5. Use the CAPM to calculate the required return for that company's stock; then explain the logic of this calculation.© BrainMass Inc. brainmass.com March 4, 2021, 7:43 pm ad1c9bdddf
Kc = Rf + beta x ( Km - Rf )
Kc is the risk-adjusted discount rate (also known as the Cost of Capital);
Rf is the rate of a "risk-free" ...
The CAPM is used to calculate the required return for a company's stock. The logic of this calculation is also explained.