Holup, Inc., makes pneumatic equipment. The beta of Holup’s stock is 1.2. The expected market risk premium is 8.5 percent, and the current risk-free rate is 6 percent. Assume the capital-asset-pricing model holds. What is the expected return on Holup’s stock?
Beta, risk free rate and expected return are investigated. The solution is detailed and well presented. The response received a rating of “5/5” from the student who originally posted the question.