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Up1
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.
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Up1
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.
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