If the beta of Microsoft is 1.13, risk-free rate is 3% and the market risk premium is 8%, calculate the expected return for Microsoft.
A) 12.04%
B) 15.66%
C) 13.94%
D) 8.65%

Question

Quizplus · Accepted Answer

The expected return for Microsoft can be calculated using the Capital Asset Pricing Model (CAPM):Expected return = Risk-free rate + Beta * Market risk premiumExpected return = 3% + 1.13 * 8% = 12.04%

If the Beta of Microsoft Is 1