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capital asset pricing model

Input interpretation

capital asset pricing model
capital asset pricing model

Equation

r = r_f + β (r_m - r_f) |  r | expected return β | beta coefficient r_f | risk-free interest rate r_m | return on market
r = r_f + β (r_m - r_f) | r | expected return β | beta coefficient r_f | risk-free interest rate r_m | return on market

Input values

beta coefficient | 1.2 risk-free interest rate | 0.12% return on market | 8%
beta coefficient | 1.2 risk-free interest rate | 0.12% return on market | 8%

Results

expected return | 9.576% = 0.09576
expected return | 9.576% = 0.09576

Possible intermediate steps

Calculate the expected return using the following information: known variables | |  β | beta coefficient | 1.2 r_f | risk-free interest rate | 0.12% r_m | return on market | 8% The relevant equation that relates expected return (r), beta coefficient (β), risk-free interest rate (r_f), and return on market (r_m) is: r = r_f + β (r_m - r_f) Substitute known variables into the equation: known variables | |  β | beta coefficient | 1.2 r_f | risk-free interest rate | 0.12% r_m | return on market | 8% | : r = 0.12% + 1.2 (8% - 0.12%) Evaluate 0.0012 + 1.2 (0.08 - 0.0012): r = 0.09576 Convert {0.09576} into % (percent) using the following: 1 = 100%: Answer: |   | r = 9.576%
Calculate the expected return using the following information: known variables | | β | beta coefficient | 1.2 r_f | risk-free interest rate | 0.12% r_m | return on market | 8% The relevant equation that relates expected return (r), beta coefficient (β), risk-free interest rate (r_f), and return on market (r_m) is: r = r_f + β (r_m - r_f) Substitute known variables into the equation: known variables | | β | beta coefficient | 1.2 r_f | risk-free interest rate | 0.12% r_m | return on market | 8% | : r = 0.12% + 1.2 (8% - 0.12%) Evaluate 0.0012 + 1.2 (0.08 - 0.0012): r = 0.09576 Convert {0.09576} into % (percent) using the following: 1 = 100%: Answer: | | r = 9.576%