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What is abc required rate of return using capm

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Problem 1. ABC Company's stock has a beta of 1.95, the risk-free rate is 2.25%, and the market risk premium is 7.00%. What is ABC's required rate of return using CAPM?

Problem 2. Hazel Morrison, a mutual fund manager, has a $60 million portfolio with a beta of 1.00. The risk-free rate is 3.25%, and the market risk premium is 6.00%. Hazel expects to receive an additional $40 million, which she plans to invest in additional stocks. After investing the additional funds, she wants the fund's required and expected return to be 15%. What must the average beta of the new stocks be to achieve the target required rate of return?

 

Reference no: EM132702049

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