alleryStart learning →Rf 7.5%, Rm 12.5%, beta 0.9. What is Ke by CAPM?
A13.5%
B11.25%
C10.0%
D12.0%
Answer & Solution
Correct answer: D. 12.0%
Premium is 0.9 x 5 = 4.5, so Ke = 7.5 + 4.5 = 12.0%.
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