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tester [92]
3 years ago
15

A stock has an expected return of 12.8 percent and a beta of 1.19, and the expected return on the market is 11.8 percent. What m

ust the risk-free rate be?
Business
1 answer:
Stels [109]3 years ago
8 0
<span>We know from Capital asset pricing model that expected return (ER) of any stock can be calculated as ER = Rf + beta* ( Rm - Rf) where, Rf is risk free rate Rm is expected return on market. Therefore, 0.128 = Rf + 1.19* (0.118 - Rf) which is equivalent to 0.19 Rf = 0.140 - 0.128 Or, risk free rate, Rf = 0.0654 ~ 6.54%</span>
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Explanation:

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Operating Activities include cash generated from operations, Interest Paid and Tax Paid.

Investing Activities include payment to acquire or proceeds from sale of property, plant and equipment, proceeds from government grants, interest and dividend received.

Financing Activities include proceeds from issue of shares, proceeds from long term borrowings, dividends paid etc.

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