Required annual rate of return on the market portfolioForums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › Required annual rate of return on the market portfolioThis topic has 2 replies, 2 voices, and was last updated 5 months ago by LMR1006.Viewing 3 posts - 1 through 3 (of 3 total)AuthorPosts October 20, 2024 at 4:21 pm #712577 AnonymousInactiveTopics: 10Replies: 6☆Hi. I’m confused about how they got the 14% in this question.The risk-free rate of return is 6% and the required return on a security with a beta factor of 1.2 is 15.6%.What is the required annual rate of return on the market portfolio?A.11.5% B.13.0% C.14.0% D.17.5%WORKINGUsing CAPM 15.6% = 6% + 1.2 (Rm ? 6)%. Therefore, Rm = 14% October 20, 2024 at 6:21 pm #712583 LMR1006KeymasterTopics: 4Replies: 1439☆☆☆☆☆So CAPM = RF + (RM -RF) Be15.6% = 6 + [? -6] 1.2So 15.6 – 6 =9.2So 9.2= [? -6] 1.2So 9.2 / 1.2 = 8 Therefore RM must be 8+6 = 14 October 20, 2024 at 6:25 pm #712585 LMR1006KeymasterTopics: 4Replies: 1439☆☆☆☆☆Can I suggest you watch our videos on CAPMAuthorPostsViewing 3 posts - 1 through 3 (of 3 total)You must be logged in to reply to this topic.Log In Username: Password: Keep me signed in Log In