Given a risk-free rate of return of 4 percent, a beta of 1.5, and a return on the market portfolio of 12 percent, what is the required rate of return using the CAPM?
A)16%
B)12%
C)24%
D)8%

Question

Quizplus · Accepted Answer

The CAPM formula is: Required Rate of Return = Risk-Free Rate + Beta * (Market Return - Risk-Free Rate). Plugging in the given values: 4% + 1.5 * (12% - 4%) = 4% + 1.5 * 8% = 4% + 12% = 16%.

Given a Risk-Free Rate of Return of 4 Percent, a Beta