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alukav5142 [94]
3 years ago
5

Your estimate of the market risk premium is 9%. The risk-free rate of return is 4% and General Electric has a beta of 0.7. Accor

ding to the CAPM, what is its expected return?
Mathematics
1 answer:
weqwewe [10]3 years ago
6 0

Answer:

Expected rate of return is 10.3%

Step-by-step explanation:

CAPM calculate the expected return by using the risk free rate market premium and beta of investment. It helps to decided the additional investment in a well diversified portfolio.

Formula of CAPM to calculate the rate of return

Rate of Return = Risk free rate + beta ( Risk premium )

Rate of Return = 4% + 0.7 ( 9% )

Rate of Return = 4% + 0.7 ( 9% )

Rate of Return = 10.3%

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Step-by-step explanation:

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6 0
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