You are given the following information about corporate stock P and the market: Risk-free rate is 7. The expected return and volatility for corporate stock P is 7 and 33 respectively. The Expected Return and Volatility for Market is 6 and 12 respectively. The correlation between the returns of corporate stock P and the market is 18. Assume the Capital Asset Pricing Model holds. Calculate the required return for corporate stock P? Could somebody solve this question? Thanks.

well. I found this on another post. Hope this is helpful for you. E(Ri) = Rf + βi (E(Rm) – Rf) where E(Ri) is the expected return on capital asset and E(Rm) is the market risk premium.

A CFA General Discussion About Capital Asset Pricing Model

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This topic has 1 reply, 2 voices, and was last updated Aug-215:33 am by metwoboy.

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- lucky07
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  - Undecided
  01 Aug 2021 at 11:46 pm
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  You are given the following information about corporate stock P and the market:
  - Risk-free rate is 7.
  - The expected return and volatility for corporate stock P is 7 and 33 respectively.
  - The Expected Return and Volatility for Market is 6 and 12 respectively.
  - The correlation between the returns of corporate stock P and the market is 18.
  - Assume the Capital Asset Pricing Model holds.
  Calculate the required return for corporate stock P?
  
  Could somebody solve this question?
  
  Thanks.
- metwoboy
  Participant
  - CFA Level 1
  30 Aug 2021 at 5:33 am
  Up
  1
  ::
  well. I found this on another post. Hope this is helpful for you.
  
  E(R_i) = R_f + β_i (E(R_m) – R_f)
  
  where E(R_i) is the expected return on capital asset and E(R_m) is the market risk premium.
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