question archive The SPSCO index is expected to return 10
The SPSCO index is expected to return 10
Subject:FinancePrice:2.86 Bought6
The SPSCO index is expected to return 10.2%, and Treasury securities carry a 5.2% yield. A stock has a beta of 15. Based on the CAPM what is the required rate of return on this stock? Select one: a. 7.5% b. 7,8% OC 12.7% O d. 153%
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As per CAPM Model
Required Rate = Rf + beta(Rm - Rf)
So,
Required Rate = 0.052 + 1.50(0.102 -0.052)
Required Rate = 12.7%
