Expected rate of return on a stock with a beta


Problem:

The risk-free rate of return is 4.4 percent and the market risk premium is 14 percent.

Task:

Question: What is the expected rate of return on a stock with a beta of 1.6?

  • 22.40 percent
  • 26.80 percent
  • 21.04 percent
  • 10.52 percent
  • 13.40 percent

Note: Show all workings.

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Finance Basics: Expected rate of return on a stock with a beta
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