Answer:Based on this information, he estimates Bruehl's beta to be:____0.88___
Explanation:
Following the CAPM,Capital Asset Pricing Model formula, The expected
return on stock for Bruehl Industries is given as
Expected Return = Risk free Return + Market Risk Premium X Beta
or
Expected = Risk free rate + Beta x (Market rate - Risk free rate)
Where
Expected Return =10.50%
Risk free Rate= 2.10%,
Beta=??
market rate=11.40%
Expected = Risk free rate + Beta x (Market rate - Risk free rate)
10.25 = 2.10 + Beta ( 11.40- 2.10)
10.25-2.10= Beta (9.30)
8.15%/9.30%= Beta
Beta=0.876 rounded to 0.88
Based on this information, he estimates Bruehl's beta to be:____0.88_____
