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kenneth0125
16.11.2020 •
Business
A manager believes his firm will earn a 14 percent return next year. His firm has a beta of 1.2, the expected return on the market is 11 percent, and the risk-free rate is 5 percent. Compute the return the firm should earn given its level of risk. (Round your answer to 2 decimal places.)
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Ответ:
r = 0.122 or 12.2%
Explanation:
Using the CAPM, we can calculate the required/expected rate of return on a stock. This is the minimum return required by the investors to invest in a stock based on its systematic risk, the market's risk premium and the risk free rate.
The formula for required rate of return under CAPM is,
r = rRF + Beta * (rM - rRF)
Where,
rRF is the risk free rate rM is the market returnr = 0.05 + 1.2 * (0.11 - 0.05)
r = 0.122 or 12.2%
Ответ:
to communicate at hyper speed so the one being emailed to can know or execute the order for a cause
or so that companies can send free ads into your cumputer:(
Explanation: