Answered: A stock has a risk premium of 7 percent…

A stock has a risk premium of 7 percent and a beta of 1.4. If the risk-free rate is 2.2 percent. What is the expected return of the market? A. 7.2% B. 9.2% C. 12.7%

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter2: Risk And Return: Part I

Section: Chapter Questions

Problem 2P: AA Corporations stock has a beta of 0.8. The risk-free rate is 4%, and the expected return on the...

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Question

A stock has a risk premium of 7 percent and a beta of 1.4. If the risk-free rate is 2.2 percent. What is the expected return of the market?

A. 7.2%

B. 9.2%

C. 12.7%

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