Siebling Manufacturing Company's ordinary shares have a beta of .8.If the expected risk-free return is 2% and the market offers a premium of 8% over the risk-free rate,what is the expected return on Siebling's ordinary shares?

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Quizplus · Accepted Answer

The expected return can be calculated using the Capital Asset Pricing Model (CAPM): Expected Return = Risk-Free Rate + Beta * Market Risk Premium. Here, it is 2% + 0.8 * 8% = 8.4%.

Siebling Manufacturing Company's Ordinary Shares Have a Beta of