Computing risk-free rate of return


Emery Inc. has a beta equal to 1.5 and a required return of 14% based on the CAPM. If the market risk premium is 8%, the risk-free rate of return is ________.

a) 2%

b) 1.5%

c) 4%

d) 3%

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Finance Basics: Computing risk-free rate of return
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