CAPM AND REQUIRED RETURN
Calculate the required rate of return for Mudd Enterprises assuming that investors expect a 3.6% rate of inflation in the future. The real risk-free rate is 1%, and the market risk premium is 7%. Mudd has a beta of 1.8, and its realized rate of return has averaged 15% over the past 5 years. Round your answer to two decimal places. %
EXPECTED AND REQUIRED RATES OF RETURN
Assume that the risk-free rate is 7% and the market risk premium is 5%.
What is the required return for the overall stock market? Round your answer to two decimal places. %
What is the required rate of return on a stock with a beta of 0.9? Round your answer to two decimal places. %