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2 years ago

The market risk premium is 9.0%, and the risk-free rate is 5.0%. If the expected return on a bond is 9.5%, what is its beta?

Business

1 answer:

leva [86]2 years ago

4 0

Answer:

The beta is 1

Explanation:

The computation of beta using the CAPM model is shown below:

As we know that

Expected rate of return = Risk free rate of return + Beta × Market risk premium

9.5% = 5% + Beta × 9.0%

9.5% - 5% = Beta × 9.0%

9.0% = Beta × 9.0%

So, the beta is 1

We simply applied the above formula so that the correct value could come

And, the same is to be considered

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3 years ago

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3 years ago

Phips Co. purchases 100 percent of Sips Company on January 1, 20X2, when Phips' retained earnings balance is $320,000 and Sips'

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Answer:

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