Question:
when the situation is as under:- The CIS Corporation’s stocks have a beta of 2. The risk-free rate is 7.5% and the expected return on the market portfolio is 15%. The corporation presently pays a dividend of Rs.4 per share, and investors expect it to experience a growth in dividends of 10% per annum for many years to come.
Answer:
required rate of return = risk free rate + beta (market rate - risk free rate)
= 0.075 + 2(0.15 - 0.075)
= 0.225 or 22.5%
The way you ask your question implies you don't understand CAPM. I suggest you study harder.
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