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CAPM

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › CAPM

  • This topic has 1 reply, 2 voices, and was last updated 11 years ago by John Moffat.
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  • Author
    Posts
  • December 3, 2014 at 8:32 am #216683
    sonia
    Member
    • Topics: 13
    • Replies: 28
    • ☆

    risk free rate is 6 % and the require rrturn on security with a beta factor 1.2 is 15.6%
    what is the required annual rate of return on the market portfolio ?
    plz solve this and explain this working

    December 3, 2014 at 8:49 am #216693
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54831
    • ☆☆☆☆☆

    req return = risk free + beta (mkt – risk free)

    15.6 = 6 + 1.2 (mkt – 6)

    9.6 = 1.2 mkt – 7.2

    1.2 mkt = 16.8

    mkt = 16.8 / 1.2 = 14%

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