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Expected Rate of Return using CAPM

1a. If the beta of Amazon.com is 2.2, risk-free rate is 5.5% and the market risk premium is 8%, calculate the expected rate of return for Amazon.com stock:

A. 15.8%
B. 14.3%
C. 35.2%
D. 23.1%

1b.If the beta of Exxon Mobil is 0.65, risk-free rate is 4% and the market rate of return is 14%, calculate the expected rate of return from Exxon:
A. 12.6%
B. 10.5%
C. 13.1%
D. 6.5%

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1a. If the beta of Amazon.com is 2.2, risk-free rate is 5.5% and the market risk premium is 8%, calculate the expected rate of return for Amazon.com stock:

A. 15.8%
B. 14.3%
C. 35.2%
D. 23.1%

Answer: D. 23.1%

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Solution Summary

Calculates Expected Rate of Return using Capital Asset Pricing Model (CAPM)

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