The risk free return is 6% and the expected return on market portfolio is 15%. If the required return on stock is 18%, what is beta ?

Answer 4(a) R A = R F + beta (R M - R F ) Where, R F = Risk Free Return R M = Expected Return on Market Portfolio R A = Required Rate of Return 0.18 = 0.06 + beta (0.15 - 0.06) Beta = (0.18 - 0.06) / (0.15 - 0.06) = 0.12 / 0.09 = 1.33