Consider the CAPM. The expected return on the market is 18%. The expected return on a stock with a beta of 1.2 is 20%. What is the risk-free rate?

EBK CFIN
6th Edition
ISBN:9781337671743
Author:BESLEY
Publisher:BESLEY
Chapter8: Risk And Rates Of Return
Section: Chapter Questions
Problem 15PROB
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Risk free rate

Consider the CAPM. The expected
return on the market is 18%. The
expected return on a stock with a beta
of 1.2 is 20%. What is the risk-free rate?
Transcribed Image Text:Consider the CAPM. The expected return on the market is 18%. The expected return on a stock with a beta of 1.2 is 20%. What is the risk-free rate?
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