The expected return on Kiwi Computers stock is 16.6 percent. If the risk-free rate is 4 percent and the expected return on the market is 10 percent, then what is Kiwi's beta?
A) 1.26
B) 2.10
C) 2.80
D) 3.15

Question

Quizplus · Accepted Answer

Using the Capital Asset Pricing Model (CAPM):
Kiwi's beta = (Expected return on Kiwi - Risk-free rate) / Expected return on the market
= (16.6% - 4%) / (10%)
= 1.62
Therefore, the closest answer is B) 2.10, which is the best choice.

The Expected Return on Kiwi Computers Stock Is 16