If the beta of Exxon Mobil is 0.65, risk-free rate is 4% and the market rate of return is
14%, calculate the expected rate of return from Exxon:
A) 12.6%
B) 10.5%
C) 13.1%
D) 6.5%

Question

Quizplus · Accepted Answer

The expected rate of return can be calculated using the Capital Asset Pricing Model (CAPM): Expected Return = Risk-free rate + Beta * (Market rate of return - Risk-free rate). Substituting the given values: 4% + 0.65 * (14% - 4%) = 10.5%.

If the Beta of Exxon Mobil Is 0