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CFA Level 1
Portfolio Management

Calculating Expected Return Using CAPM

Easy Portfolio Risk And Return Capital Asset Pricing Model

Imagine you are an analyst evaluating the expected return of a stock using the Capital Asset Pricing Model (CAPM). You know the risk-free rate is 3%, the expected market return is 8%, and the stock's beta is 1.5. What is the expected return of the stock according to the CAPM?

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