Analysts state that the required return from Plummet Soft Drinks stock is 25%,and the returns from Treasury bills and the market portfolio are 4% and 20%,respectively.What is Plummet's beta?
A) 0.79
B) 1.00
C) 0.05
D) 1.31
E) 1.13

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_fc0f_5519_a768_67654b4bf0c4_TB2902_11 β_i = 11ea7fdb_fc0f_7c2a_a768_65323c069cd6_TB2902_11 = 11ea7fdb_fc0f_7c2b_a768_37ca1cbf4996_TB2902_11 = 1.31

Analysts State That the Required Return from Plummet Soft Drinks