Ritter Company's stock has a beta of 1.40,the risk-free rate is 4.25%,and the market risk premium is 5.50%.What is Ritter's required rate of return?
A)11.36%
B)11.65%
C)11.95%
D)12.25%

Question

Quizplus · Accepted Answer

The required rate of return can be calculated using the Capital Asset Pricing Model (CAPM): Required return = Risk-free rate + Beta * Market risk premium = 4.25% + 1.40 * 5.50% = 11.95%.

Ritter Company's Stock Has a Beta of 1