Question

An investor is forming a portfolio by investing $80,873 in stock A that has a beta

of 0.8, and $89,197 in stock B that has a beta of 0.8. The market risk

premium is equal to 2.8% and Treasury bonds have a yield of 1.7%. What is the

required rate of return on the investor’s portfolio?

Group of answer choices

3.74%

4.04%

3.84%

3.94%

3.64%

Assume the risk-free rate is 2% and that the market risk premium is 4.3%.  

If a stock has a required rate of return of 14.7%, what is its beta?

Group of answer choices

2.95

2.75

2.15

2.35

2.55

Answer 1

The required rate of return is the minimum return an investor will accept for owning a company's stock, as compensation for a given level of risk associated with holding the stock.

below is the answer mentioned