Your estimate of the market risk premium is 5%. The risk-free rate of return is 4%, and JB Hi Fi has a beta of 1.5. According to the Capital Asset Pricing Model (CAPM), what is its expected return? Select one: 1. 10.4% 2. 11.0% 3. 11.5% 4. 11.9%

Your estimate of the market risk premium is 5%. The risk-free rate of return is 4%, and JB Hi Fi has a beta of 1.5. According to the Capital Asset Pricing Model (CAPM), what is its expected return? Select one: 1. 10.4% 2. 11.0% 3. 11.5% 4. 11.9%

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 20P

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Question

Your estimate of the market risk premium is
5%. The risk-free rate
of return is 4%, and JB Hi Fi has a beta of 1.5.
According to the Capital Asset Pricing Model
(CAPM), what is its expected return?
Select one:
1. 10.4%
2. 11.0%
3. 11.5%
4. 11.9%

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