1. The expected return on the stock market is 10% with a standard deviation of 27%. The risk-free rate is 3%. AB Corp. has covariance (COV) of 0.075 with the market return. The stock currently trades at $100 and is expected to increase to $114. What is the required return on the stock?© BrainMass Inc. brainmass.com October 9, 2019, 11:41 pm ad1c9bdddf
The solution describes the Capital Asset Pricing Model and how to apply it to obtain the answer to this question.