Question

The stock of Wiley United has a beta of 0.92. The market risk premium is 8.4 percent and the risk-free rate is 3.2 percent. What is the expected return on this stock?

Answer 1

Answer:

10.93%

Explanation:

Using CAPM formula, we have the following:

Expected return = risk-free rate + Beta x (Market risk premium)

                           = 3.2% + 0.92 x 8.4% = 10.93%