Suppose the risk-free rate is 9%,the market risk premium is 8%,and a security's beta is 0.6;then,you should require a return on the security of 13.4%.

Question

Quizplus · Accepted Answer

The required return on the security can be calculated using the Capital Asset Pricing Model (CAPM) formula: Required Return = Risk-Free Rate + (Beta * Market Risk Premium). Plugging in the given values: Required Return = 9% + (0.6 * 8%) = 9% + 4.8% = 13.8%.

Suppose the Risk-Free Rate Is 9%,the Market Risk Premium Is