stock in your portfolio?13. Using CAPM A stock has a beta of 1.14, the expected return on the marketis 10.9 percent, and the risk-free rate is 3.6 percent. What must the expectedreturn on this stock be?

CAPM is the capital asset pricing model. As per this model, the expected return on stock = Risk free…

Answered: 13. Using CAPM A stock has a beta of…

13. Using CAPM A stock has a beta of 1.14, the expected return on is 10.9 percent, and the risk-free rate is 3.6 percent. What must the expected return on this stock be?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter2: Risk And Return: Part I

Section: Chapter Questions

Problem 12P: Stock R has a beta of 1.5, Stock S has a beta of 0.75, the expected rate of return on an average...

See similar textbooks

Related questions

Q: The risk-free rate is 5%, the beta of Stock A is 1.2, the beta of Stock B is 0.8, and the expected…

A: In the given question we require to calculate the Expected return on Stock B. We calculate the…

Q: Suppose that the risk-free rate is 5% and that the market risk premium is 7%.What is the required…

A: Risk free rate = 5% Market risk premium = 7% Beta 1 = 1 Beta 2= 1.7

Q: Stock Z has a beta of 1.4, and its required rate of return is 10.00%. Stock B's beta is 0.80. If the…

A: In the given case, we have provided the stock Z beta, required rate of return and risk free rate.…

Q: The risk-free rate is 3.7 percent and the expected return on the market is 12.3 percent. Stock A has…

A: If expected return is more than required return then security is undervalued.If required return is…

Q: 0.6 52

A: Risk per unit return of stock is calculated by using a metric coefficient of variation Risk adjusted…

Q: Stock Y has a beta of 1.35 and an expected return of 14.30 percent. Stock Z has a beta of 0.75 and…

A: Formula: Expected return = Risk free rate + (Beta*Market risk premium)

Q: What must the expected return on the market be?

A: Introduction: The expected return of market is considered to be an important concept because it is…

Q: The risk-free rate is 5.6%, the market risk premium is 8.5%, and the stock’s beta is 2.27. What is…

A: The risk-free rate is 5.6%, beta is 2.27 and market risk premium is 8.5%. Capital Asset Pricing…

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: Use the expected return-beta equation from the CAPM. What is the expected return for a stock if the…

A: Given,Risk-free rate (Rf)= 4% Beta= 0.9Expected return for the market (Rm)= 6%

Q: 8.41% 9.21% 7.48% 10.04% none of these

A: CAPM is capital assets pricing model that is used to calculate the required rate based on risk…

Q: According to the CAPM, what is the expected rate of return for a stock with a beta of 1.2, when the…

A: The Capital Asset Pricing Model (CAPM) describes the relationship between systematic risk and…

Question

stock in your portfolio?
13. Using CAPM A stock has a beta of 1.14, the expected return on the market
is 10.9 percent, and the risk-free rate is 3.6 percent. What must the expected
return on this stock be?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1 Explanation

VIEW

Step 2 Answer

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

a. A stock has a beta of 1.2, the expected return on the market is 17 percent, and the risk-free rate is 8 percent. What must the expected return on this stock be?
Question: A stock has an expected return of 9.7 percent, its beta is .89, and the risk-free rate is 2.9 percent. What must the expected return on the market be?
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?
Please give me answer general accounting
A stock has a beta of 1.68, the expected return on the market is 14.72, and the risk-free rate is 4.65. What must the expected return on this stock be? O 15.67 percent O 16.75 percent O 17.10 percent O 18.46 percent 21.57 percent
Question: A stock has an expected return of 10.9 percent, the risk-free rate is 3.1 percent, and the market risk premium is 6.9 percent. What must the beta of this stock be?
A stock has an expected return of 13.4 percent and a beta of 1.15, and the expected return on the market is 12.4 percent. What must the risk - free rate be?
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.
A stock has an expected return of 13.4 percent, its beta is 1.60, and the risk-free rate is 5.5 percent. What must the expected return on the market be?
A stock has an expected return of 18.00%. The risk-free rate is 1.45% and the market risk premium is 9.30%. What is the β of the stock?
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?
Use the expected return-beta equation from the CAPM. What is the expected return for a stock if the risk-free rate is 4%, beta 0.9 and the expected return for the market portfolio is 6%?