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MFI Inc. has a beta of . If the expected market return is percent and the​ risk-free rate is ​percent, what is the appropriate required return of MFI​ (using the​ CAPM)? Using the​ CAPM, the appropriate required return of MFI is 14.74​%. ​(Round to two decimal​ places.)

Answer :

Parraingo

Answer: 14.38%

Explanation:

Required return using the Capital Asset Pricing Model (CAPM) is:

= Risk free rate + Beta * (Expected market return - Risk free rate)

= 6.5% + 1.05 * (14% - 6.5%)

= 6.5% + 7.875%

= 14.38%

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