what is the required rate of return
Subject: Business / Finance
Question
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How do you calculate the required rate of return?
The risk-free rate, kRF, is 3.3 percent and the market risk premium, (kM – kRF), is 5 percent. Assume that required returns are based on the CAPM. Your $1 million portfolio consists of $672,000 invested in a stock that has a beta of 1.3 and the remainder invested in a stock that has a beta of 1.5. What is the required return on this portfolio?
