WestJet stock has a beta of 1.5.If the risk-free rate is 2.4%,and the expected market return is 10%,what is the expected return of WestJet stock,according to the CAPM?

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Quizplus · Accepted Answer

The expected return of WestJet stock can be calculated using the Capital Asset Pricing Model (CAPM) formula: Expected Return = Risk-Free Rate + Beta * (Market Return - Risk-Free Rate). Plugging in the values: Expected Return = 2.4% + 1.5 * (10% - 2.4%) = 2.4% + 1.5 * 7.6% = 2.4% + 11.4% = 13.8%.

WestJet Stock Has a Beta of 1