Question

The beta for Wal-Mart stock is 0.75, Suppose that the risk-free rate is rf = 0.02...

The beta for Wal-Mart stock is 0.75, Suppose that the risk-free rate is rf = 0.02 (2 percent) and that the expected market risk premium is 0.2 (20 percent), then use the CAPM to calculate the expected RETURN for Wal-Mart Stock, the result is:

A.

0.16
B.

0.17
C.

0.18
D.

0.19
Math   Statistics-And-Probability   
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Answer #1

Answer:-

Given that:-

The formula for calculating the Expected return of an asset is

Expected return of investment

risk-free rate

Deta of the investment

Market risk premimum.

Given

  

  

Option B)0.17 is correct answer.

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