A stock has an expected return of 20% and a beta of 1.5, and the expected return on the market is 15%. What must the risk-free rate be?© BrainMass Inc. brainmass.com November 24, 2022, 11:30 am ad1c9bdddf
Keep in mind the calculation for a stock's expected return. The Expected return (20%) is essentially equal to the market's risk free rate (unknown in this case) ...
The solution explains the computation of the answer of the risk-free rate.