Respuesta :
Required return [tex]=[/tex] Risk-free rate [tex]+[/tex] Beta*(MArket rate- risk-free rate )
[tex]11.75=2.3+1.23*(Market rate-2.3)[/tex]
[tex](11.75-2.3)/1.23=Market rate-2.3[/tex]
[tex]Market rate=(11.75-2.3)/1.23+2.3[/tex]
Hence the required rate of return on the market would be [tex]9.98[/tex]%(Approx).
What is Return in the Share market? How do stocks produce returns?
A return is the increase in value of a project, investment, or item over time. This increase in value can be expressed as a price increase or a percentage increase. A gain is shown by a positive return, whilst a loss is indicated by a negative return.
As a simple illustration, a company with a [tex]5[/tex]% dividend yield in relation to its purchase price and a [tex]5[/tex]% value growth over the first year of ownership would have generated a [tex]10[/tex]% total return over the course of a year. Both a dollar amount and a percentage can be used to determine total returns.
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