What do new parents really need? This list aims to shed some light on the subject: Basic Baby Clothes. Shopping at Babies âRâ Us might lead you to believe your baby needs a bikini, a robe, 40 kinds of shoes, and their own formalwear. But newborns only need the basics.
Calculate the market risk premium by subtracting the risk-free (Rf) rate from the market return (Rm). The expression for the market risk premium is Rm-Rf.
Step 2. Multiply the risk-free rate by the stock's beta to find the market risk premium. In this example, if the stock has a beta of 1.2, multiply 4.5 percent by 1.2 to get the market risk premium of 5.4 percent. Step 3. Add the market risk premium to the risk-free rate to find the required return on equity. In this example, add the risk-free rate of 3 percent to the market risk premium of 5.4 percent to find the required rate of return -- in this case, 8.4 percent.