dy Tools Tips ips ols 7 ductory Ch 08 Assignment Risk and Rates of Return...

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dy Tools Tips ips ols 7 ductory Ch 08 Assignment Risk and Rates of Return REQUIRED RATE OF RETURN Percent 16 0 120 8 0 4 0 0 0 6 7 6 0 5 1 1 Return on HC s Stock 1 0 RISK Beta CAPM Elem nts Risk free rate TRF Market risk premium RPM Happy Corp stock s beta Required rate of return on Happy Corp stock 15 Value 2 0 following graph plot SML and indicates t rn that Investors required from HC free rate 4 4 7 6 2 2 or 4 0 Marl premium 7 8 10 8 4 5 or 6 0 HC beta 0 2 0 6 or 1 0 Rate of return 6 5 6 8 9 5 7 6

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