contestada

"In February 2017 the risk-free rate was 4.15 percent, the market risk premium was 8 percent, and the beta for Twitter stock was 1.72. What is the expected return that was consistent with the systematic risk associated with the returns on Twitter stock? (Round answer to 2 decimal places, e.g. 17.54%.)"

Respuesta :

Tundexi

Answer:

17.91%

Explanation:

Using the CAPM Model

CAPM Model = R(F) +Beta (Twitter stock) * (E (Rm)-E (R(f))

The expected return = 4.15% + 1.72*8%

The expected return = 0.0415 + 1.72*0.08

The expected return = 0.0415 + 0.1376

The expected return = 0.1791

The expected return = 17.91%

Thus, the expected return that was consistent with the systematic risk associated with the returns on Twitter stock is 17.91%

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