A stock has an expected return of 15.0 percent, its beta is 0.90, and the risk-free rate is 5.3 percent. What must the expected return on the market be

16.07%

Explanation:

The computation of the expected return on the market is shown below

As we know that

Expected Return on stock = Risk free return + beta (Expected Market Rate of Return - Risk free return)

15 % = 5.3% + 0.90 * (Expected Market Rate of Return - 5.3%)

15 % - 5.3% : 0.90 = Expected Market Rate of Return - 5.3%

10.77% = Expected Market Rate of Return - 5.3 %

So, expected market rate of return is

= 10.77 + 5.3%

= 16.07%

We simply applied the above formula