Assume the following information about the market and JumpMasters' stock. JumpMasters' beta = 1.50,the risk-free rate is 3.50%,the market risk premium is 10.0%.Using the SML,what is the expected return for JumpMasters' stock?
A)7.50%
B)13.50%
C)18.50%
D)27.00%

Question

Quizplus · Accepted Answer

The expected return using the SML (Security Market Line) is calculated as: Risk-free rate + (Beta * Market risk premium) = 3.50% + (1.50 * 10.0%) = 18.50%.

Assume the Following Information About the Market and JumpMasters' Stock