Your estimate of the market risk premium is 4%. The risk-free rate of return is 4%, and General Motors has a beta of 1.3. According to the Capital Asset Pricing Model (CAPM), what is its expected return? A. 8.7% B. 8.3% C. 9.7% D. 9.2%

Your estimate of the market risk premium is 4%. The risk-free rate of return is 4%, and General Motors has a beta of 1.3. According to the Capital Asset Pricing Model (CAPM), what is its expected return? A. 8.7% B. 8.3% C. 9.7% D. 9.2%

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 7P

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Question

11f

Your estimate of the market risk premium is 4%. The risk-free rate of return is 4%, and General Motors has a beta of 1.3. According to the Capital Asset Pricing Model
(CAPM), what is its expected return?
A. 8.7%
B. 8.3%
C. 9.7%
D. 9.2%

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