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77julia77 [94]
3 years ago
14

The stock in Bowie Enterprises has a beta of .87. The expected return on the market is 11.70 percent and the risk-free rate is 2

.89 percent. What is the required return on the company's stock
Business
1 answer:
Tems11 [23]3 years ago
4 0

Answer:

10.55%

Explanation:

The stock in Bowie's enterprise has a beta of 0.87

The expected return on the market is 11.70%

The risk free rate is 2.89%

Therefore, the required return on the company stock can be calculated as follows

= 2.89%+0.87(11.70%-2.89%)

= 2.89%+10.179%-2.5143%

= 2.89%+7.6647%

= 10.55%

Hence the required return on the company's stock is 10.55%

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