Question

Lear Corp. has an expected excessreturn of 8% next year. Assume Lear’s beta is 1.43. If the economy booms and the stock market beats expectations by 5%, what was Lear’s actual excess return?
A. 7.15%
B. 13%
C. 15.15%
D. 18.59 %

Answer 1

Answer:

Lear’s actual excess return is C. 15.15%

Explanation:

Hi, all we have to do is the following calculation.

$Excess Return=0.08+1.43*0.05=0.1515$

So, the excess of return is 15.15%

Best of luck