Rodriguez Roofing's stock has a beta of 1.23,its required return is 11.25%,and the risk-free rate is 4.30%.What is the required rate of return on the stock market? (Hint: First find the market risk premium.)
A)9.95%
B)10.20%
C)10.45%
D)10.72%

Question

Quizplus · Accepted Answer

The market risk premium is 11.25% - 4.30% = 6.95%. The required rate of return on the stock market is 4.30% + 6.95% * 1.23 = 10.20%.

Rodriguez Roofing's Stock Has a Beta of 1