Question

Bathgate PLC stock has an expected return of 8.27% and a beta of 0.7. If the shares of Bathgate PLC are fairly priced and the expected return on the market portfolio is 9.8%, what is the risk-free rate?

Name: bathgate plc stock has an expected return of 827 and a beta of 07 if the shares of bathgate plc are fairly priced and the expected return on the market portfolio is 98 what is the risk free 60044
Uploaded: 2023-12-11T23:49:15-08:00
Duration: 2 min 52 s
Channel: James Kiss
Description: bathgate plc stock has an expected return of 827 and a beta of 07 if the shares of bathgate plc are fairly priced and the expected return on the market portfolio is 98 what is the risk free 60044

          Bathgate PLC stock has an expected return of 8.27% and a beta of 0.7. If the shares of Bathgate PLC are fairly priced and the expected return on the market portfolio is 9.8%, what is the risk-free rate?

Added by Nicole Y.

Horngren’s Cost Accounting

Srikant M. Datar, Madhav V. Rajan 16th Edition

Instant Answer

Solved by Expert James Kiss

12/11/2023

Step 1

The formula is: \[ E(R_i) = R_f + \beta_i (E(R_m) - R_f) \] where: - \( E(R_i) \) is the expected return of the stock, - \( R_f \) is the risk-free rate, - \( \beta_i \) is the beta of the stock, - \( E(R_m) \) is the expected return of the market portfolio. Show more…

Show all steps

Thanks for your feedback!

Bathgate PLC stock has an expected return of 8.27% and a beta of 0.7. If the shares of Bathgate PLC are fairly priced and the expected return on the market portfolio is 9.8%, what is the risk-free rate?