Determining the CAPM: what is the Risk-free rate
A stock has an expected return of 20% and a beta of 1.5, and the expected return on the market is 15%. What must the risk-free rate be?© SolutionLibrary Inc. solutionlibary.com 9836dcf9d7 https://solutionlibrary.com/business/finance/determining-the-capm-what-is-the-risk-free-rate-30m
... the stock's Beta (1.5)X Market Risk Premium (MRP).
MRP is equal to the difference between the expected return on a market portfolio ( 15%) and the risk-free ...