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The beta for the DAK Corporation is 1.25. The yield on 30-year T-bonds is 5.65 percent, and the long-term average return on the S&P 500 is-11 percent. Calculate the required rate of return for DAK Corporation. I

Respuesta :

The required rate of return for DAK Corporation is 12.34%.

What is the required rate?

The minimal profit (return) an investor will seek or expect in exchange for taking on the risk of investing in a stock or other type of security is known as the required rate of return (RRR). RRR can also be used to determine a project's potential profitability in relation to its funding costs.

Here, we have

Given Information

Beta =   1.25

The yield on 30-year T bonds (rf)=     5.65%

Return on S&P (rM) =    11%

Required Return for DAK = rf + Beta*(rM - rf)

= 5.65% + 1.25*(11% - 5.65%)

=  12.34%

Hence,  the required rate of return for DAK Corporation is 12.34%.

To learn more about the required return from the given link

https://brainly.com/question/25790997

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