finance-A stock has an expected return of 13.0 percent,
by ella | Aug 20, 2025 | Business
|
A stock has an expected return of 13.0 percent, a beta of 1.20, and the expected return on the market is 11.63 percent. What must the risk-free rate be? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the “%” sign in your response.)
|
Suppose you observe the following situation:
|
| Security |
Beta |
Expected Return |
| Peat Co. |
1.20 |
14.6 |
| Re-Peat Co. |
.60 |
10.3 |
|
Assume these securities are correctly priced. Based on the CAPM, what is the expected return on the market? What is the risk-free rate? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Omit the “%” sign in your response.)
|
| |
|
| Expected return |
% |
| Risk-free rate |
%
|
