Suppose the Barges Corporation's common stock has an expected return of 12%. Assume that the risk-free rate is 5%,and the market risk premium is 6%. If no unsystematic influence affected Barges' return,the beta for Barges is ______.

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Quizplus · Accepted Answer

The correct answer is B.The beta for Barges can be calculated using the Capital Asset Pricing Model (CAPM):Expected return = Risk-free rate + Beta * Market risk premium12% = 5% + Beta * 6%Beta = (12% - 5%) / 6% = 1.17

Suppose the Barges Corporation's Common Stock Has an Expected Return