# Capital-asset-pricing model and WACC

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Suppose the expected return on the market portfolio is 14.7 % and the risk-free rate is 4.9 %. Morrow Inc. stock has a beta of 1.3

Assume the capital-asset-pricing model holds.

a. What is the expected return on Morrow's stock?

b. If the risk-free rate decreases to 4 %, what is the expected return on Morrow's stock?

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#### Solution Summary

Expected return on the market portfolio using capital-asset-pricing model and WACC

$2.49