The rate on six-month Treasury notes currently 5%.Andvark Company stock has a beta of 1.69 and a required rate of return of 15.4%.According to CAPM,determine the return on the market portfolio.
A)11.15%
B)6.15%
C)17.07%
D)14.11%

Question

Quizplus · Accepted Answer

The CAPM formula is: Required Return = Risk-Free Rate + Beta * (Market Return - Risk-Free Rate). Plugging in the values: 15.4% = 5% + 1.69 * (Market Return - 5%). Solving for Market Return gives 11.15%.

The Rate on Six-Month Treasury Notes Currently 5