Q: Assume that the risk-free rate is 3.5% and the expected return on the market is 10%. What is the…
A: Details given to us are : Risk free rate = 3.5% Expected return on market = 10% Beta = 0.7 We need…
Q: Fiske Roofing Supplies' stock has a beta of 1.23, its required return is 12.00%, and the risk-free…
A: according to CAPM formula: rs=rf+beta×rm-rf where, rs=required rate of return of stockrf=risk free…
Q: A stock has a beta of 1.19 and an expected return of 11.27 percent. If the risk-free rate is 3.4…
A: Given: Beta = 1.19 Expected return = 11.27% Risk free rate = 3.4%
Q: The expected return on the market is 15% and the risk-free rate of return is 5%. If the Beta of the…
A: In given question we need to compute the expected rate of return for stock using CAPM.
Q: Using CAPM A stock has an expected return of 13 percent, the risk-free rate is 4.5 percent, and the…
A: Given details are : Expected return = 13% Risk free rate = 4.5% Market risk premium = 7% We need to…
Q: A stock has an expected return of 15 percent, its beta is 0.9, and the risk-free rate is 6 percent.…
A: Given the following information: Expected return on stock (r) = 15% Beta (b) = 0.9 Risk free rate…
Q: Suppose the risk-free return is 4.2% and the market portfolio has an expected return of 11.4% and a…
A: Expected return = Risk free rate + beta * (market return -risk free rate )
Q: Suppose the risk-free return is 7.9% and the market portfolio has an expected return of 11.5% and a…
A: Risk free rate = 7.9% Stock beta = 0.77 Market return = 11.5%
Q: A stock has an expected return of 13.1 percent, its beta is 1.70 and the risk free premium rate is…
A: Risk market return is used in CAPM model to calculate expected return on the stock and it is also…
Q: The risk-free rate is 6% and the expected return on the market is 13%. What is the required rate of…
A: Given information is as follows: Risk free rate (Rf) = 6% Expected return on market (Rm) = 13% Beta…
Q: What is the expected return on a stock with a beta of 1.40, if the riskless rate is 4% and the…
A: In this question we need to find expected return according to CAPM. According to CAPM: Expected rate…
Q: The risk-free rate is 2.1%, the market rate is 11.5%, and the expected return on a stock is 17.32%.…
A: CAPM stands for Capital Asset Pricing Model which indicates the relation between the expected…
Q: Suppose there are two stocks, one with expected return of 14% with a beta of 1 and the other with…
A: The expected rate of return is the return that an investor expects the company to generate out of…
Q: When the return on the market portfolio goes up by 5%, the return on Stock A goes up on average by…
A: Return is the basic factor which affects the investor’s decision. CAPM is the tool which is used to…
Q: Assume that the risk-free rate is 6 percent and the expected return on the market is 13 percent.…
A: Given details are : Risk free rate (Rf) = 6% Expected return on market (Rm) = 13% Beta of stock =…
Q: Suppose MegaChip has a beta of 1.3, whereas Littlewing stock has a beta of .7. If the risk-free…
A: Given the following information: Beta of MegaChip: 1.3 Beta of Littlewing: 0.7 Risk free rate: 4%…
Q: A stock has an expected return of 14.3 percent, the risk-free rate is 3.2 percent, and the market…
A: Formula Expected return = Risk free rate+(Beta*Market risk premium) Where Expected return = 14.3%…
Q: By how much does the required return on the riskier stock exceed the required return on the less…
A: Required return: It is the minimum rate of return an investor will seek for investing in a company.…
Q: What is the expected return for a stock that has a beta of 1.4, if the risk-free rate is 5%, and the…
A: Capital Asset pricing model: This model is used to determine the required rate of return on the…
Q: Stock R has an expected rate of return of 9.5%, stock S has a beta of 1.2, the expected rate of…
A: In the given question we require to compute the beta of stock R and expected rate of return for…
Q: A stock has an expected return of 13.5 percent, its beta is 1.16, and the expected return on the…
A: Expected return = 13.5% Beta = 1.16 Market return = 12.50%
Q: If the expected return from the market is 18%, the risk-free rate is 11%, and the beta of Loschert…
A: The term beta of a stock represents the responsiveness of a particular stock in relation to the…
Q: A stock has an expected return of 13.1%, its beta is 1.70, and the risk free premium rate is 2.6%.…
A: In the given question we require to calculate the expected return on market from the following…
Q: Given the following information, use the CAPM to calculate the beta of the stock. The required rate…
A: Capital Asset Pricing Model CAPM model shows the relationship between the expected return and risk…
Q: JaiLai Cos. stock has a beta of 0.7, the current risk-free rate is 6.1 percent, and the expected…
A: CAPM model provides formula that calculates the expected return on stock based on its level of risk.…
Q: The stock of Big Joe's has a beta of 1.62 and an expected return of 13.20 percent. The risk-free…
A: The company is analyzing required rate of return for the portfolio by calculating it with the market…
Q: A stock has a required return of 11%, the risk-free rate is 7%, and the market risk premium is 4%.…
A: Required return = risk free rate + beta*market risk premium 11 = 4 + beta*7
Q: A stock has an expected return of 13.6 percent, the risk-free rate is 3.7 percent, and the market…
A: In the above question we require to compute the expected beta of the stock. This question can be…
Q: What is the expected return for ABC Stock if the risk-free rate is 3.0%, the market risk premium is…
A: The mathematical representation of the formula is:
Q: A stock has a beta of 1.12, the expected return on the market is 10.6 percent, and the risk-free…
A: A model that represents the relationship of the required return and beta of a particular asset is…
Q: The risk-free rate of return is 4 percent and the market risk premium is 8 percent. What is the…
A: In given question we need to compute the expected rate of return for stock.
Q: The risk-free rate of return is currently 0.02, whereas the market risk premium is 0.07. If the beta…
A: Capital Pricing Model (CAPM) is an investment theory that shows the relationship between the…
Q: The expected return on the market is 15%, the risk-free rate is 8o/o, and the beta for Stock B is…
A: Given: The expected return = 15% = 0.15 Risk free rate = 8% = 0.08 Beta for stock = 0.8
Q: A stock has an expected return of 11.25 percent, a beta of 0.82, and the expected return on the…
A: Capital asset pricing model is used to compute the expected return from a stock: Here, Expected…
Q: What is the expected return on a stock with a beta of .8, given a risk-free rate of 3.5% and an…
A: In this question we need to compute the expected return on stock. This question can be solved using…
Q: The stock of Straum Wreck has a beta of 0.84. The market risk premium is 7.4% and the risk-free rate…
A: Given the following information: Beta: 0.84 Market risk premium: 7.4% Risk free rate: 2.0%
Q: A stock has a beta of 0.7 and an expected return of 7.3 percent. If the risk-free rate is 1.3…
A: Beta = 0.7 Expected return = 7.3% Risk free rate = 1.3%
Q: A stock has an expected return of 12.7 percent and a beta of 1.18, and the expected return on the…
A: Given information: Expected return is 12.7% Beta value is 1.18 Expected return on market is 11.7%
Q: What is the expected return for Stock A if it has a beta of 1.25, the risk-free rate is 1.5%, and…
A: Given, Beta = 1.25 Risk-free rate = 1.5% Expected market return = 10.2%
Q: A stock has a beta of 1.04, the expected return on the market is 11.75, and the risk-free rate is…
A: A stock is a financial security issued by companies to raise equity funds from the primary market.…
Q: The risk-free rate of return is 4.8 percent and the market risk premium is 15 percent. What is the…
A: Risk free rate = 4.8% Market risk premium = 15% Beta = 1.80
Q: a. A stock has a beta of 1.2, the expected return on the market is 17 percent, and the risk-free…
A: Following details are given to us: Beta = 1.2 Expected return on Market = 17% Risk free rate= 8% We…
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- The risk-free rate is 5.6%, the market risk premium is 8.5%, and the stock’s beta is 2.27. What is the required rate of return on the stock, E(Ri)? Use the CAPM equation.The risk-free rate is 5.6%, the market risk premium is 8.5%, and the stock's beta is 2.27. What is the required rate of return on the stock, E(Ri)?A stock has an expected return of 0.11, its bets is 0.82, and the risk-free rate is 0.04. What must the expected return on the market be?
- Suppose risk-free rate of return = 2%, market return = 7%, and Stock B’s return = 11%. a. Calculate Stock B’s beta. b. If Stock B’s beta were 0.80, what would be its new rate of return?What are the components of the risk-free rate and What is financial risk? If the standard deviation of a stock’s return is 5% and its expected return is 8%, what it the C.V.?(d) Suppose the risk-free rate is 4%, the market risk premium is 15% and the betas for stocks X and Y are 1.2 and 0.2 respectively. Using the CAPM model, estimate the required rates ofreturn of Stock X and Stock Y. (e) Given the results above, are Stocks X and Y overpriced or underpriced? Explain.
- How do you find the market risk premium and market expected return given the expected return of stock, beta, and risk free rate? Example: The expected return of a stock with a beta of 1.2 is 16.2%. Calculate the market risk premium and the market expected return, given a risk-free rate of 3%.A stock has an expected return of 13.5 percent, its beta is 1.16, and the expected return on the market is 12.5 percent. What must the risk-free rate be?Assume that the risk-free and rate is 5.50% and the market risk premium is 7.75%. What is the expected return for the overall stock market (rm)?
- (d) Suppose the risk-free rate is 4%, the market risk premium is 15% and the betas for stocks X and Y are 1.2 and 0.2 respectively. Using the CAPM model, estimate the required rates of return of Stock X and Stock Y. (e) Given the results above, are Stocks X and Y overpriced or underpriced? Explain.Suppose Stock A has B = 1 and an expected return of 11%. Stock B has a B = 1.5. The risk- free rate is 5%. Also consider that the covariance between B and the market is 0.135. Assume the CAPM is true. Answer the following questions: a) Calculate the expected return on share B. b) Find the equation of the Capital Market Line (CML). c) Build a portfolio Q with B = 0 using actions A and B. Indicate weights (interpret your result) and expected return of portfolio Q.Give typing answer with explanation and conclusion the expected return on stock A is 11.35%. the expected return on stock B is 8.7%. assuming CAPM holds, if the beta of stock A is higher than the beta of stock B by 0.17, what should the risk premium be?