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Required Rate of Return (RRR): Formula & Calculation

Instructions:

Choose an answer and hit 'next'. You will receive your score and answers at the end.

question 1 of 3

When beta in the capital assets pricing model is 2.0 for a stock, what does that indicate?

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1. A stock has a beta of 1.5, the risk free return is 3%, and the market return is 8%. What is the stock's RRR?

2. If a business is financed with $700,000 debt and $300,000 equity, what is the weight of its debt?

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About This Quiz & Worksheet

Go through the quiz and worksheet to test what you know about the required rate of return (RRR). You need to know how to calculate the required rate of return for the quiz, which includes several practice problems.

Quiz & Worksheet Goals

These tools help you check your understanding of:

  • Using the dividend discount model to calculate the RRR
  • Best calculation method for project investment decisions for a company
  • Calculating the RRR for a security

Skills Practiced

  • Reading comprehension - ensure that you draw the most important details from the lesson on the required rate of return
  • Information recall - access the knowledge you have gained about finding the average weight of debt
  • Knowledge application - use your knowledge to answer questions about different calculation methods, such as the capital asset pricing model

Additional Learning

See what else you can learn by using the lesson called Required Rate of Return (RRR): Formula & Calculation. Use this lesson to:

  • Define the required rate of return
  • Practice using the different calculation approaches for RRR
  • Determine what Beta is
  • Explain concepts like cost of stock and cost of debt
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