The stock in bowie enterprises has a beta of 1.14. the expected return on the market is 12.20 percent and the risk-free rate is 3.33 percent. what is the required return on the company's stock

Required return on stock = 13.44%

Explanation:

We know,

The required return on the company's stock = Risk-free rate of return + (Expected return on the market - Risk-free rate of return) x beta

= + () x b

Given,

Beta, β = 1.14;

Risk-free return, = 3.33%

Return on the market, = 12.20%

Putting the numbers on the formula, we can get,

The required return on the company's stock = 3.33% + (12.20% - 3.33%) x 1.14

required return on stock = 3.33% + 10.1118%

required return on stock = 13.44% (Rounded to two decimal places)

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