Suppose the MiniCD Corporation's common stock has a return of 12%.Assume the risk-free rate is 4%, the expected market return is 9%, and no unsystematic influence affected Mini's return.The beta for MiniCD is:
A)0.89.
B)1.60.
C)2.40.
D)3.00.
E)It is impossible to calculate beta without the inflation rate.

Question

Quizplus · Accepted Answer

Using the CAPM formula: 
MiniCD's beta = (expected return - risk-free rate) / expected market return - risk-free rate)
= (12% - 4%) / (9% - 4%) 
= 8% / 5% 
= 1.60.

Suppose the MiniCD Corporation's Common Stock Has a Return of 12%.Assume