Question

g According to the CAPM, what is the expected rate of return for a stock with a beta of 1.2. when the risk-free rate is 6% and the market rate of return is 12%

Answer 1

20.40%

Step-by-step explanation:

According to CAPM :

expected rate of return = risk free rate + (beta x market rate of return)

6% + (1.2 x 12%) = 20.40%