Your estimate of the market risk premium is 7%. The risk-free rate of return is 5%, and General Motors has a beta of 1.2. According to the Capital Asset Pricing Model (CAPM), what is its expected return? A. 13.4% B. 11.4% C. 12.7% D. 10.1%
Added by Victor H.
Step 1
2, we can substitute these values into the formula: Expected Return = 5% + 1.2 * 7% Expected Return = 5% + 8.4% Expected Return = 13.4% Show more…
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