What is the required rate of return on stock with beta

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1. Which is these is not consistent with Merton's model of credit risk? a) default is driven by an exogenous process b) equity can be viewed as a call option on assets c) asset volatility can be derived from equity volatility d) default probabilities can be estimated

2. Assume that the risk-free rate is 4.5% and the expected return on the market is 10%. What is the required rate of return on a stock with a beta of 2.4? Round your answer to two decimal places.

Reference no: EM132000877

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