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Calculate: Risk Free Rate

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Question: Assume that the risk-free rate of interest is 7.3% and that the market risk premium is 14.1%. What is the required rate of return on a stock that has a beta of 0.3? What is the expected return for the overall stock market?

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Solution Summary

The solution is comprised of a clear and concise explanation of the required return which is shown through the use of the CAPM equation. All calculations are included.

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To calculate the required return we use the CAPM equation
Required return = Risk free rate + Market risk premium X beta

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