A stock has a beta of 1.15 and a reward-to-risk ratio of 6.15 percent. If the risk-free rate is 3 percent, what is the stock's expected return

Question

asked Dec 17, 2021 51.5k views

1 Answer

Moin Shirazi · Answer 1 · 2021-12-22T20:27:59+0000

Answer:

10.07%

Step-by-step explanation:

According to CAPM

the stock's expected return = risk free rate + (beta x reward-to-risk ratio )

3% + (6.15% x 1.15) = 10.07%