You estimate of the market risk premium is 7%. The risk-free rate of return is 3.1 % and General Motors has a beta of 1.9. According to the Capital Asset Pricing Model (CAPM), what is its expected return?

You estimate of the market risk premium is 7%. The risk-free rate of return is 3.1 % and General Motors has a beta of 1.9. According to the Capital Asset Pricing Model (CAPM), what is its expected return?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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You estimate of the market risk premium is
7%. The risk-free rate of return is 3.1% and
General Motors has a beta of 1.9. According
to the Capital Asset Pricing Model (CAPM),
what is its expected return?

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