Answer:
beta = 1.64
Explanation:
in order to calculate beta, we can use the cost of equity formula:, but instead of cost of equity we can use expected return:
expected return = risk free rate + (beta x market risk premium)
11.2% = 3% + (beta x 5%)
beta x 5% = 11.2% - 3% = 8.2%
beta = 8.2% / 5% = 1.64
in order to calculate beta, we can use the cost of equity formula:
