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    Todd98's Avatar
    Todd98 Posts: 2, Reputation: 1
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    #1

    Mar 6, 2009, 08:25 PM
    Beta Coefficient
    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's Avatar
    ROLCAM Posts: 1,420, Reputation: 23
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    #2

    Mar 6, 2009, 10:49 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

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