Suppose that Simmons plc's ordinary equity has a beta of 1.6.If the risk-free rate is 5% and the market risk premium is 4%, the expected return on Simmons' equity is:

Question

Quizplus · Accepted Answer

The expected return on Simmons' equity can be calculated using the Capital Asset Pricing Model (CAPM) formula: Expected Return = Risk-Free Rate + (Beta * Market Risk Premium). Plugging in the given values: Expected Return = 5% + (1.6 * 4%) = 5% + 6.4% = 11.4%.

Suppose That Simmons Plc's Ordinary Equity Has a Beta of 1.6.If