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    msbelize's Avatar
    msbelize Posts: 1, Reputation: 1
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    #1

    Apr 10, 2008, 05:52 PM
    A company's common stock has a beta of .8. If the expected risk- free return is 7% an
    A company's common stock has a beta of .8. If the expected risk- free return is 7% and the market offers a premium of 8% over the risk-free rate, what is the expected return of the company's common stock?
    antila's Avatar
    antila Posts: 2, Reputation: 1
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    #2

    Nov 17, 2010, 09:28 PM
    Rs = Rf + Bs (Rm-Rf)
    Rs= 7% + [ .8 *(8%-7%)]
    = 7%+ [ .8*1%]
    = 7 % + .8%
    = 7.8 %
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