alleryStart learning →The risk-free rate is 6 percent, market return 12 percent and beta 1.2. What required return does CAPM give?
A7.2%
B12%
C14.4%
D13.2%
Answer & Solution
Correct answer: D. 13.2%
Required return = 6% + 1.2 x (12% - 6%) = 6% + 7.2% = 13.2%.
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