Assume that the risk-free rate is 4.5% and the required return on the market is 13%. What is the required rate of return on a stock with a beta of 2

Required rate of return= 21.5 %

Explanation:

The capital asset pricing model is a risk-based model. Here, the return on equity is dependent on the level of reaction of the the equity to changes in the return on a market portfolio. These changes are captured as systematic risk. The magnitude by which a stock is affected by systematic risk is measured by beta.

Under CAPM, Ke= Rf + β(Rm-Rf)

Rf-risk-free rate, β= Beta, Rm= Return on market.

Using this model,  

Ke= 4.5% + 2(13-4.5%)

= 21.5 %

Required rate of return= 21.5 %

2 weeks ago lol enoy your dunce cap

hi,

henry is an economist and wants to understand the relationship between inflation and consumer spending habits. for his research, he needs the consumer price index for 2014 and the inflation rate. based on the prices of goods given, what will he find to be the cpi and inflation rate for 2014? assume that a consumer’s basket for three consecutive years consists of the following:

you dont privide answer choices.

answer - 15% of a inflatation rate is 15% less in cpi