Answered: A stock has a beta of 1.3, and a…

A stock has a beta of 1.3, and a market risk premium of 8%. The risk-free rate is 4%. What is the expected return on the stock? A. 12.0% B. 14.4% C. 10.4% D. 13.2%

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter2: Risk And Return: Part I

Section: Chapter Questions

Problem 12P: Stock R has a beta of 1.5, Stock S has a beta of 0.75, the expected rate of return on an average...

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Question

A stock has a beta of 1.3, and a market risk premium of 8%. The risk-free rate is 4%. What is the expected return on the stock?

A. 12.0%

B. 14.4%

C. 10.4%

D. 13.2%

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