Explore BrainMass

Explore BrainMass

    Expected return on stock

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

    Suppose the expected return on the market portfolio is 13.8 percent and the risk-free rate is 6.4 percent. The stock has a beta of 1.2. Assume the capital-asset-pricing model holds.

    A. what is the expected return on stock?

    B. If the risk-free rate decrease to 3.5 percent, what is the expected return on stock?

    © BrainMass Inc. brainmass.com June 3, 2020, 6:03 pm ad1c9bdddf
    https://brainmass.com/business/capital-asset-pricing-model/expected-return-on-stock-45634

    Solution Preview

    Suppose the expected return on the market portfolio is 13.8 percent and the risk-free rate is 6.4 percent. The stock has a beta of 1.2. Assume the ...

    $2.19

    ADVERTISEMENT