Suppose the beta of Exxon-Mobil is 0.65,the risk-free rate is 4%,and the expected market rate of return is 14%.Calculate the expected rate of return on Exxon-Mobil.
A)12.6%
B)10.5%
C)13.1%
D)6.5%

Question

Quizplus · Accepted Answer

The expected rate of return can be calculated using the Capital Asset Pricing Model (CAPM): Expected Return = Risk-free rate + Beta * (Market Return - Risk-free rate). Plugging in the values: 4% + 0.65 * (14% - 4%) = 10.5%.

Suppose the Beta of Exxon-Mobil Is 0