question archive A stock has an expected return of 11 percent, the risk-free rate is 6
A stock has an expected return of 11 percent, the risk-free rate is 6
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A stock has an expected return of 11 percent, the risk-free rate is 6.1 percent, and the market risk premium is 4 percent. Calculate the stock's beta.
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Answer:
| Stock Beta | 1.225 |
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| Please find below the answer | |
| Statementshowing Computations | |
| Paticulars | Amount |
| Beta, B | |
| Market risk premium, MRP | 4.00% |
| Risk Free Rate, Rf | 6.10% |
| Return on Stock , ke | 11.00% |
| Ke = Rf+ B(MRP) | |
| 11% = 6.1% + B(4%) | |
| 4.9% = B(4%) | |
| B = 4.9/4 | |
| Beta = 1.225 |
