greatsavagebeast
12.12.2019 •
Business
The beta of an mnc acquisition target is 1.38 and last year’s s& p 500 return was at 14.92%, while for dedicated savers, t-bills languished at a very dismal 2.21%. with this information, what is the required rate of return for the mnc if they were to acquire this direct foreign investment? ke = rf+b(rm-rf) where ke= required return on stock rf = risk-free rate of return rm = market return b = beta of stock
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Ответ:
The Required Rate of Return for the MNC is 19,8%
Explanation:
Consider the following formula to calculate the required rate of return.
Required rate of return as per CAPM = Risk free rate + beta*(market return - risk free rate
= 2.21% + 1.38(14.92%-2.21%)
= 19.7498%
Ответ: