Wendy purchased 800 shares of Robotics stock at $3 per share on 1/1/09.Wendy sold the shares on 12/31/09 for $3.45.Robotics stock has a beta of 1.3,the risk-free rate of return is 3%,and the market risk premium is 8%.The required return on Robotics stock is
A) 13.4%.
B) 16.5%.
C) 17.6%.
D) 21.1%.

Question

Quizplus · Accepted Answer

The required return on Robotics stock can be calculated using the Capital Asset Pricing Model (CAPM), which is given by the formula: Required Return = Risk-Free Rate + Beta * (Market Risk Premium). Plugging in the given values: Required Return = 3% + 1.3 * (8%) = 3% + 10.4% = 13.4%.

Wendy Purchased 800 Shares of Robotics Stock at $3 Per