For a stock with beta equal to 1.5 signiﬁes that the market risk premium is 10%, and the expected
return on the stock is 15%.

Name: For a stock with beta equal to 1.5 signiﬁes that the market risk premium is 10%, and the expected return on the stock is 15%.
Brand: Quizplus
Rating: 4.9 (31 reviews)

Question

Quizplus · Accepted Answer

A stock with a beta of 1.5 indicates it is 50% more volatile than the market. If the market risk premium is 10%, the expected return on the stock should be 15% plus the risk-free rate, not just 15%.

For a Stock with Beta Equal to 1