What is the expected return on a share with a beta of 0.8, given a risk-free rate of 3.5% and an expected market return of 15.5%?

Question

Quizplus · Accepted Answer

The expected return can be calculated using the Capital Asset Pricing Model (CAPM) formula: Expected Return = Risk-Free Rate + Beta * (Market Return - Risk-Free Rate). Plugging in the given values: Expected Return = 3.5% + 0.8 * (15.5% - 3.5%) = 3.5% + 0.8 * 12% = 3.5% + 9.6% = 13.1%.

What Is the Expected Return on a Share with a Beta