The required return on Beta stock is 14%. The risk- free rate of return is 4% and the real rate of return is 2%. How much are investors requiring as compensation for risk?

Name: The required return on Beta stock is 14%. The risk- free rate of return is 4% and the real rate of return is 2%. How much are investors requiring as compensation for risk?
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Question

Quizplus · Accepted Answer

The compensation for risk is the difference between the required return on the stock and the risk-free rate. Here, it is 14% - 4% = 10%.

The Required Return on Beta Stock Is 14