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Todd98
Mar 6, 2009, 07:25 PM
Given the following information, ra = 14.7%; rrf = 5.25%; rm = 12%, calculate the beta coefficient for Stock A that would be consistent with equilibrium. Explain why this represents equilibrium.
ROLCAM
Mar 6, 2009, 09:49 PM
ra = rrf + beta (rm - rrf)

14.7 = 5.25 + beta (12 - 5.25)

14.7 - 5.25 = beta (6.75)

9.45 = beta (6.75)

beta = 1.4