Suppose that Luther's beta is 0.9.If the market risk premium is 8% and the risk-free interest rate is 4%,then the expected return for Luther stock is?
A)7.6%
B)11.6%
C)11.2%
D)12.9%

Question

Quizplus · Accepted Answer

The expected return for Luther stock can be calculated using the Capital Asset Pricing Model (CAPM):Expected return = Risk-free interest rate + Beta * Market risk premiumExpected return = 4% + 0.9 * 8% = 11.2%

Suppose That Luther's Beta Is 0