If the risk-free rate is 6 percent, the return on an average stock is 10 percent, and the beta of this project is 1.50, then the expected return from the project is _____.
A) 12%
B) 24%
C) 4%
D) 19%
E) 23%

Question

Quizplus · Accepted Answer

The expected return can be calculated using the Capital Asset Pricing Model (CAPM): Expected Return = Risk-Free Rate + Beta * (Market Return - Risk-Free Rate). Substituting the given values: 6% + 1.50 * (10% - 6%) = 12%.

If the Risk-Free Rate Is 6 Percent, the Return on an Average