The required return on a security is 10%,the risk-free rate is 5%,and the return on the market is 14%.What is the beta of the firm?
A) 0.14
B) 0.55
C) 0.83
D) 1.00
E) 1.40

Question

Quizplus · Accepted Answer

Rearrange the CAPM equation to solve for beta. E(k_i) = k_F + β_i[E(k_M) - k_F] β_i = 11ea7fdb_fc0d_0b0d_a768_a5e76282e3a2_TB2902_11 β_i = 11ea7fdb_fc0d_321e_a768_a37c900c0891_TB2902_11 = 11ea7fdb_fc0d_321f_a768_e18d350569cf_TB2902_11 = 0.55

The Required Return on a Security Is 10%,the Risk-Free Rate