To find the beta ($\beta$) of the stock, we use the Capital Asset Pricing Model (CAPM) formula:

$E(R_i) = R_f + \beta \cdot (E(R_m) - R_f)$

Where:

• $E(R_i)$ = Expected return of the stock = 14.6% or 0.146
• $R_f$ = Risk-free rate = 5.7% or 0.057
• $(E(R_m) - R_f)$ = Market risk premium = 7.3% or 0.073

Rearranging to solve for $\beta$:

$\beta = \frac{E(R_i) - R_f}{E(R_m) - R_f}$

Substitute the values:

$\beta = \frac{0.146 - 0.057}{0.073}$

$\beta = \frac{0.089}{0.073}$

$\beta = 1.219$

Final Answer:

$\beta = 1.219$

Would you like further clarification or help with another calculation?

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Related Questions:

1. What does the beta of a stock signify in terms of risk?
2. How does changing the market risk premium affect the beta calculation?
3. If the risk-free rate increases, how does it impact the expected return under CAPM?
4. How can CAPM be used to evaluate the attractiveness of an investment?
5. How does beta affect a portfolio's overall risk?

Tip:

Always double-check your calculations and ensure units (e.g., percentages vs. decimals) are consistent for accurate results.