Explore BrainMass

Explore BrainMass

    Figuring the CAPM: What must the expected return be?

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

    A stock has an expected return of 10%, its beta is 0.9, and the risk-free rate is 5%. What must the expected return on the market be?

    © BrainMass Inc. brainmass.com March 4, 2021, 5:37 pm ad1c9bdddf
    https://brainmass.com/business/capital-asset-pricing-model/figuring-the-capm-what-must-the-expected-return-be-3093

    Solution Preview

    Keep in mind the calculation for a stock's expected return. The Expected return (10%) is essentially equal to the market's risk free ...

    Solution Summary

    Given the risk-free rate, the beta, the solution calculates the expected return on the market.

    $2.49

    ADVERTISEMENT