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Zolol [24]
2 years ago
9

The stock in Bowie Enterprises has a beta of 1.10. The expected return on the market is 12.40 percent and the risk-free rate is

3.21 percent. What is the required return on the company's stock
Business
1 answer:
MrMuchimi2 years ago
4 0

Based on the beta of Bowie Enterprises stock, the expected return on the market, and the risk free rate, the required return should be 13.32%.

<h3>What is the required return?</h3>

You can find this using the Capital Asset Pricing Model:

Required return = Risk free rate + Beta x (Market return - risk free rate)

Solving gives:

= 3.21  + 1.10 x (12.40 - 3.21)

= 13.32%

In conclusion, the return is 13.32%.

Find out more on the Capital Asset Pricing Model at brainly.com/question/13937576.

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