QUESTION

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8-11 CAPM AND REQUIRED RETURN Calculate the required rate of return for Mudd Enterprises assuming that investors expect a $3.6 \%$ rate of inflation in the future. The real risk-free rate is $1.0 \%$, and the market risk premium is $6.0 \%$. Mudd has a beta of 1.5 , and its realized rate of return has averaged $8.5 \%$ over the past 5 years.

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