4. what is the expected c has a market beta of 2, in S&P500 index return and O 7.5% O 8.5%

Q: Suppose that the PSE composite index will move from 3,500 to 4,266 and rate for T-bills is 5%.  The…

A: The market return of the stock can be calculated by the changes in index. and this market return…

Q: If share C has a beta of 1,3; the risk-free rate is 8% and market risk premium is 7%, what would the…

A: Step 1: Given Value for Calculation Beta = b = 1.3Risk Free rate = rf = 8%market Risk Premium = mrp…

Q: Expected Return CAPM If you know that the risk-free rate is 4.5% and the expected market risk…

A: CAPM is a model which is used to calculate the expected rate of return on the basis of the risk-free…

Q: Q2: By using CAPM calculate the required return on equity if Risk free rate is 18%, Expected Market…

A: Given Information: Risk-free Rate=18% Beta=1.5 Expected Market Return=20%

Q: If the market return is 10%, the expected return from SBI is 16 %, and the alpha of the SBI is 2%,…

A: Market return = 10% Expected return = 16% Alpha = 2%

Q: The alpha for company 2 is 1.66. Its beta is 0.291 and the expected return on the market is 4.60%.…

A: The single index model evaluates a security's expected return and risk by examining its correlation…

Q: Far Horizon Journeys has an expected return of 9.90%, the risk-free rate is 2.20%, and the market…

A: Expected Return = 9.90% Risk Free Rate = 2.20% Market Risk Premium = 6.85%   Beta = ?

Q: he risk-free rate is 8% and the expected return on a market portfolio is 13%. If a share has a beta…

A: Risk free rate = 8% Market return = 13% Stock beta = 1.20

Q: The risk-free rate is 3.1 percent and the market expected return is 12.2 percent. What is the…

A: Risk free rate = rf = 3.1%Market return = mr = 12.2%Beta = b = 1.16

Q: What is the beta of a stock with an expected return of 106, if Treasury bills yield 4% and the…

A: Financial management consists of directing, planning, organizing and controlling of financial…

Q: Dhofar Silicon Services has a B(Beta)= 1.4.The risk free rate on a treasury bill is currently 8.2%…

A: The Correct option is OPTION-C. This problem is related to Capital Asset Pricing Model (CAPM)…

Q: Mr. Kinders has contributed $116.00 at the end of each month into an RRSP paying 6% per annum…

A: Monthly contribution (P) = $116.00 Interest rate = 6% Monthly interest rate (r) =…

Q: The S&P500 has an expected return of 15.8%. The riskless rate is 2.7% and XYZ's beta is 1.3. What…

A: In the following question we are required to calculate the expected return on XYZ stock according to…

Q: Company Q has earnings of $3.00 per share, a market price of $25, and a beta of 1.25. The risk-free…

A: Given the following information: Earnings per share: $3 per share Market price of share: $25 Beta:…

Q: Find Cost of common stock if risk free rate is 7, beta 1.3 and market return 13%.

A: Data given: Re = Cost of common stock= ? ( Required) Rrf =Risk free rate = 7% β  =  Beta= 1.3 Rm =…

Q: Sandrine Machinery is a Swiss multinational manufacturingcompany. Currently, Sandrine’s financial…

A: a) Computation of NPV: Hence, the NPV is $181.81. Computation of rate of return: Hence, the rate…

Q: The risk-free rate is 4%%. The market risk-premium is 79%. The beta is 20. What is the expected rate…

A: Financial management consists of directing, planning, organizing and controlling of financial…

Q: Required Rates of Return Suppose that the risk-free rate is 5% and that the market risk premium is…

A: To calculate the required return we will use the below  formula   Required return = Risk free…

Q: Assume that the ridk-free rate is 4% and the required return on the market is 11%.What is the…

A: As per CAPM, Required Rate of return = Risk free rate + (Beta * Market risk premium) Market risk…

Q: The beta =

A: The beta of a stock is the degree of responsiveness to movements in price with changes in the stock…

Q: If a firm's beta is 1.1, the risk-free rate is 6%, and the expected return on the market is 14%,…

A: Details given are : Beta = 1.1 Risk free rate = 6% Expected market return = 14% We need to compute…

Q: Assuming that the expected market return [E(Rm)] is 11% and the risk-free rate of return (Rf) is 8%,…

A: The cost of equity refers to the required rate of return that is expected from the investment. It is…

Q: Assume that the CAPM holds, and refer to the graph below. What is the correlation between stocks B…

A: Here's a detailed explanation for better understanding. To find the correlation between stocks B and…

Q: Dhofar Silicon Services has a Beta = 2.42 The risk free rate on a treasury bill is currently 8.2%…

A: Beta = 2.42 Risk free rate = 8.2% Market return = 16%

Q: Stock A: Beta is 1.30, the require return in 12.00% Stock B: Beta 0.80. If the risk free is 4.75%.…

A: To solve the question, first we need to determine the market return and then use it to determine the…

Q: 3. c Assume that risk-free rate = 3% and market return = 8%. For a stock with a beta of 1.4, what is…

A: Given details are : Risk free rate = 3% Market return = 8% Beta = 1.4 From above we require to…

Q: 5. Given the following expectations for the next year, what is the expected return, standard…

A: To determine the Expected Return, Standard Deviation and Beta of Stock A from the data. Return on…

Q: Intro Tesla has a beta of 1.5. The risk-free rate is 1.2% and the expected return on the S&P500 is…

A: For the calculation of Tesla's cost of equity we will use the below formula   Cost of equity = Risk…

Q: What is the beta of a stock with an expected retum of 109%, if Treasury bills yield 4% and the…

A: Financial management consists of directing, planning, organizing and controlling of financial…

Q: Assume that the risk-free rate is 6% and the required return on the market is 10%. What is the…

A: The formula used as follows: Required rate of return=rRF+Beta rM-rF

Q: The risk-free rate is 2% and the expected return on a market portfolio is 6%. If a share has a beta…

A: As per CAPM Ri = Rf + B (Rm - Rf) Where Ri = Return on equity Rf = Risk free rate of return B = Beta…

Q: Dhofar Energy Services has a Beta = 1  The risk-free rate on a treasury bill is currently 4.4% and…

A: By Capital asset pricing model: Cost of equity = Rf + ß*(Rm - Rf) Rm = (Cost of equity - Rf)/ß + Rf

Q: Find the Beta for Stock given the cost of equity is 14.2% The expected return on the market is 9.4%…

A: Through CAPM, we can find the beta of the stock. Formula for finding beta will be as below. Expected…

Q: The risk free rate is 9.5%. If the market portfolio has a mean return of 6.6%, what security market…

A: The capital assets pricing model has been represented by the SML  line which gives you required rate…

Q: (Expected rate of return using CAPM) a. Compute the expected rate of return for Acer common stock,…

A: CAPM is a financial model used to determine the expected rate of return on investment, particularly…

Q: D1 = $1.25, g = 6.00%, β = 1.15, market risk premium = 5.5%, and risk free rate = 4 %.  Find the…

A: Capital Asset Pricing Model(CAPM) is method used to compute minimum required rate that stock must…

Q: iven the information below, calculate the reward-to-risk ratio implied by the CAPM pricing model.

A: The risk-reward ratio determines how much reward is there for risk of  every dollar.

Q: 4. Assume that the risk-free rate is 5% and the expected return on the market is 12%. What is the…

A: In the given question we are required to calculate required rate of return of stock using given…

Q: Using CAPM to determine the expected rate of return for risky assets, consider the following example…

A: The Capital Asset Pricing Model (CAPM) is a widely used financial model that provides a framework…

Q: The market rate of return increased by 8.32%, while the rate of return on XYZ stock increased by…

A: Expected Return is a financial metric that provides insight into the potential gain or loss from an…

Q: 2. Required Rate of Return Suppose TRF = 4%, FM = 9%, and TA = 8%. (a) Calculate Stock A's beta.…

A: Captial asset pricing model defines that the required rate of return or cost of equity is the sum of…

Q: If the average range of the market’s return (as measured by the S&P 500) is +/- 9% for a given…

A: An investor's expected return is the typical return they anticipate from a particular investment…

Q: Dhofar Energy Services has a Beta = 0.93 The risk - free rate on a treasury bill is currently 4.4%…

A: Given: Beta =0.93Risk free rate(Rf) =4.4%Cost of equity(Ke) =20.70%

Q: ased on the NPV, Grady should pick (Sports or restaurant) project?What is the adjusted NPV…

A: Calculation of NPV of restaurant and equivalent annual annuity is shown below: Hence, NPV and EAA…

Risk and return

Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary. 

Capital Asset Pricing Model

Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.