Answered You can hire a professional tutor to get the answer.

QUESTION

A stock has a beta of 1. The pure rate of interest is 3.5 percent and investors require a 3 percent inflation premium.

A stock has a beta of 1.8. The pure rate of interest is 3.5 percent and investors require a 3 percent inflation premium. What is the required rate of return on this stock if the market risk premium is 6 percent? (Hint: First, calculate the risk-free rate using the pure rate and the inflation premium. Next, use this risk-free rate to find the required return on the stock.)

Show more
LEARN MORE EFFECTIVELY AND GET BETTER GRADES!
Ask a Question