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Elan Coil [88]
2 years ago
8

A stock has an expected return of 13. 24 percent, the risk-free rate is 4. 4 percent, and the market risk premium is 8. 98 perce

nt. what is the stock's beta?
Business
1 answer:
ipn [44]2 years ago
3 0

A stock has an expected return of 13. 24 percent, the risk-free rate is 4. 4 percent, and the market risk premium is 8. 98 percent. 0.75 is the stock's beta.

Calculate the beta for stock using the CAPM approach as follows:

Cost of common stock = Risk-free rate + Beta × Market risk premium

13% 7% + Beta x8%

13% 7% Beta × 8%

6% = Beta x8%

6% 8% Beta = =

=0.75

Therefore, the beta for stock using the CAPM approach is 0.75.

Market risk is the potential for loss to individuals or other companies as a result of factors that affect the overall performance of an investment in financial markets.

Learn more about market risk at

brainly.com/question/25821437

#SPJ4

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8 0
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if you expect the inflation rate to be 15 percent next year and a one-year bond has a yield to maturity of 7 percent, then the r
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<h3>Real interest rate </h3>

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Learn more about real interest rate here:brainly.com/question/6106690


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6 0
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