The beta of an mnc acquisition target is 1.38 and last year’s s& p 500 return was at 14.92%, while for dedicated savers, t-bills languished at a very dismal 2.21%. with this information, what is the required rate of return for the mnc if they were to acquire this direct foreign investment? ke = rf+b(rm-rf) where ke= required return on stock rf = risk-free rate of return rm = market return b = beta of stock

The Required Rate of Return for the MNC is 19,8%

Explanation:

Consider the following formula to calculate the required rate of return.

Required rate of return as per CAPM = Risk free rate + beta*(market return - risk free rate

= 2.21% + 1.38(14.92%-2.21%)

= 19.7498%

say it in english maybe we can

the correct answer is - no.

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