Input interpretation
![capital asset pricing model](../image_source/3e592a608c4b2db5c6cd65c72702bf66.png)
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](../image_source/021129cc0578e27db6ff955a4f907999.png)
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%](../image_source/01ef1bd6c5dcd2edf5bf9f67560a1086.png)
beta coefficient | 1.2 risk-free interest rate | 0.12% return on market | 8%
Results
![expected return | 9.576% = 0.09576](../image_source/c8ef1870b80ceb582955298a428dc6c4.png)
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%](../image_source/bb191b53eaec6b921e040a93090c1c62.png)
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%