The Saguenay Tourism Company has a beta of .80, the risk-free rate is 4%, and the market risk premium is 6%.The required return on the firm's equity is:

Question

Quizplus · Accepted Answer

The required return on the firm's equity can be calculated using the capital asset pricing model (CAPM) as:
Required return = risk-free rate + beta * market risk premium
Required return = 4% + 0.80 * 6%
Required return = 4% + 4.8%
Required return = 8.8%
Therefore, the answer is C.

The Saguenay Tourism Company Has a Beta of