The stock of Martin Industries has a beta of 1.43.The risk-free rate of return is 3.6 percent and the market risk premium is 9 percent.What is the expected rate of return?
A)11.32 percent
B)14.17 percent
C)16.47 percent
D)17.48 percent
E)18.03 percent

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 Risk Premium. Substituting the given values: 3.6% + 1.43 * 9% = 16.47%.

The Stock of Martin Industries Has a Beta of 1