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