Finance Questions? Ask a Financial Expert for Answers ASAP
Is this using CAPM (Capital Asset Pricing Model) than the required rate of return is
Risk free return + Beta *(Expected Market Return - Risk Free return)
Using the formula which is given by Renu
rA = rRF + (rM-rRF) X beta
12% = 5% + (10%-5%) X beta
beta = 7%/5%=1.40
Yes, Vineet is right.
You use the formula I provided to calculate the beta.