Required Return If the risk-free rate is 10 percent and the market risk premium is 4 percent, what is the required return for the market?
A) 4%
B) 7%
C) 10%
D) 14%

Question

Quizplus · Accepted Answer

The required return for the market can be calculated using the Capital Asset Pricing Model (CAPM) as follows:

Required return for the market = Risk-free rate + Market risk premium 
= 10% + 4% 
= 14%

Therefore, the correct answer is (D) 14%.

Required Return If the Risk-Free Rate Is 10 Percent and the Market