Linke Motors Has a Beta of 1

question 94

Multiple Choice

Linke Motors has a beta of 1.30,the T-bill rate is 3.00%,and the T-bond rate is 6.5%.The annual return on the stock market during the past 3 years was 15.00%,but investors expect the annual future stock market return to be 13.00%.Based on the SML,what is the firm's required return?

• A)13.51%
• B)13.86%
• C)14.21%
• D)14.58%
• E)14.95%

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Definitions:

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