(Answered) Capm and required returncalculate the required rate of

Economics

CAPM and Required Return

Calculate the required rate of return for XYZ, Inc. using the following information:

The investors expect a 3.0% rate of inflation, the real risk-free rate is 2.0%, the market risk premium is 6.0%. XYZ Inc. has a beta of 1.7. Over the past 5 years, the realized rate of return has average 13.0%.

nominal Rf w/inflation	5.06%	=(1+.02)*(1+.03)-1
required rate of return	5.16%	=.0506+(.0170*.06)

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