Suppose Barges plc's equity has an expected return of 12%.Assume that the risk-free rate is 5%,and the market risk premium is 6%.If no unsystematic influence affected Barges' return,the beta for Barges is ______ .

Question

Quizplus · Accepted Answer

The equation for CAPM is:

Expected return = Risk-free rate + (Market risk premium x Beta)

Plugging in the given values, we have:

12% = 5% + (6% x Beta)

Solving for Beta, we get:

Beta = (12% - 5%) / 6% = 1.17

Therefore, the answer is B.

Suppose Barges Plc's Equity Has an Expected Return of 12