Answer:
the beta of this stock is 1.90.
Explanation:
The Expected Return of a Equity stock is the cost of equity to the company.
The cost of equity can be determined by using the Capital Asset Pricing Model (CAPM) as follows :
Cost of Equity = Return on a risk free security + Beta × Market Risk Premium
Where,
Market Risk Premium = Return on Market - Return on a risk free security
14.31 % = 3.10 % + Beta × (9.00 % - 3.10 %)
14.31 % = 3.10 % + Beta × 5.90 %
11.21 % = Beta × 5.90 %
Beta = 1.90
