# Capital-asset-pricing model and WACC

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?

© BrainMass Inc. brainmass.com June 3, 2020, 6:36 pm ad1c9bdddfhttps://brainmass.com/business/weighted-average-cost-of-capital/capital-asset-pricing-model-and-wacc-67493

#### Solution Summary

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

$2.19