Answered: A stock has a beta of 1.35, the…

A stock has a beta of 1.35, the expected return on the market is 12 percent, and the risk-free rate is 4.5 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 14P: You have observed the following returns over time: Assume that the risk-free rate is 6% and the...

See similar textbooks

Related questions

Q: A business has a profit margin of 4.5% and an equity multiplier of 1.8. Its sales are $250 million,…

A: Step-by-Step Explanation and Calculation:To determine the Return on Equity (ROE) using the DuPont…

Q: General accounting

A: To estimate the P/E (Price-to-Earnings) multiple with respect to year 6 earnings, follow these…

Q: Please provide the accurate answer to this general accounting problem using appropriate methods.

A: Step 1: Definition of Accounts Receivable (AR)Accounts Receivable (AR) represents the money owed to…

Q: Compute the amount of direct materials used?

A: Explanation of Direct Materials Used: Direct materials used represents the total raw materials that…

Q: What are the proceeds from the note on July 1?

A: To calculate the proceeds from the discounted note on July 1, we follow these steps: Step 1:…

Q: ABC Company has December unit sales of 12,000 units. Assuming a 5 percent growth, what is the…

A: Formula for Projected Sales: Projected Sales=Current Sales×(1+Growth Rate) Given Data:…

Q: Can you help me solve this general accounting problem with the correct methodology?

A: Step 1: Definition of Predetermined Overhead RateThe predetermined overhead rate is the rate used to…

Q: White Co. incurs a cost of $15 per pound to produce Product X, which it sells for $26 per pound. The…

A: Provided Data:Cost to produce Product X = $15 per poundSelling price of Product X = $26 per…

Q: What would be his recognize gain ?

A: Step 1: Definition of Recognized GainRecognized gain refers to the taxable profit when a taxpayer…

Q: Marvatek Ltd. estimates its factory overhead costs to be $45,600 and machine hours to be 6,000 for…

A: Explanation of Factory Overhead Costs: Factory overhead costs encompass all manufacturing expenses…

Q: Perry Industries is preparing its direct labor budget for the next two months. Each unit of output…

A: Explanation of Direct Labor Hours:Direct labor hours refer to the amount of time workers spend…

Q: I need help with this solution and general accounting

A: Step 1: Definition of Owner's EquityOwner's equity represents the residual interest in the assets of…

Q: Overhead rate per direct labour hour

A: Step 1: Definition of Predetermined Overhead RateThe predetermined overhead rate is used in job…

Q: Quick answer with general accounting

A: Step 1: Definition of Direct Labor Price VarianceThe direct labor price variance is the difference…

Q: Please help me solve this general accounting problem with the correct financial process.

A: Concept of Business Valuation:Business valuation is the process of determining the total economic…

Q: Cecil cashed in a series EE savings bond with a redemption value

A: Step 1: Calculate the Total Interest EarnedThe total interest earned on the bond is the difference…

Q: Account solve tis asap

A: Step 1: Definition of Capital Asset Pricing Model (CAPM)The Capital Asset Pricing Model (CAPM) is a…

Q: I need help with this problem and general accounting question

A: Step 1: Definition of Retained EarningsRetained earnings refer to the portion of a company's net…

Q: Quick answer of this accounting question

A: Step 1: Definition of Adjusted Cash BalanceThe adjusted cash balance is the balance after accounting…

Q: Question

A: Concept of Cost of Asset:The cost of an asset includes the purchase price and all expenses necessary…

Q: explain properly all the answer for General accounting question Please given fast

A: Given DataBudgeted InformationVariable Cost per Support Request = $40Fixed Costs (Budgeted) =…

Q: Kindly help me with this General accounting questions not use chart gpt please fast given solution

A: Step 1: Define Factory OverheadFactory overhead refers to all the indirect costs incurred during the…

Q: Provide correct answer the accounting question not use ai

A: Step 1: Definition of Projected Benefit Obligation (PBO) and Underfunded Pension PlanThe Projected…

Q: Calculate the gross profit percentage? Answer please

A: Step 1: Definition of Gross Profit PercentageGross profit percentage (or gross margin percentage)…

Q: Provide accurate answer this financial accounting question not use ai

A: Step 1: Definition of Owner's EquityOwner's equity, also known as shareholders' equity in a…

Q: During 2022, Rousseau Industries reported net sales of $4,200,000, net income of $950,000, and…

A: Provided Data:Net sales = $4,200,000Net income = $950,000 (not used in this calculation)Depreciation…

Q: Suppose the required reserve ratio is 0.20 and individuals hold no cash.

A: Given Data Required Reserve Ratio = 0.20 (or 20%)Total Bank Deposits = $150 millionTotal Reserves…

Q: Suppose the required reserve ratio is 0.20 and individuals hold no cash. Total bank deposits are…

A: Given Data:Required Reserve Ratio = 0.20 (or 20%)Total Bank Deposits = $150 millionTotal Reserves…

Q: Hello tutor please given General accounting question answer do fast and properly explain all answer

A: Step 1: Define Accounting EquationThe accounting equation is the fundamental formula in accounting…

Q: Calculate the amount of equity

A: Step 1: DefinitionsConcept of Equity:Equity is a fundamental accounting concept that represents the…

Q: Please provide the solution to this general accounting question using proper accounting principles.

A: Step 1: Definition of Taxable Capital GainThe taxable capital gain is the portion of a capital gain…

Q: Financial Accounting

A: Step 1: Define Return on Assets (ROA)Return on Assets (ROA) is a financial ratio that measures a…

Q: Please provide the correct answer to this general accounting problem using accurate calculations.

A: Step 1: Definition of Contribution Margin RatioThe contribution margin ratio is the percentage of…

Q: Calculate the net profit

A: Step 1: DefinitionsConcept of Net Profit: Net Profit is the amount of money a business earns after…

Q: Please provide the accurate answer to this general accounting problem using valid techniques.

A: Step 1: Definition of Total Comprehensive IncomeTotal comprehensive income represents the total…

Q: Hello tutor please given General accounting question answer do fast and properly explain all answer

A: Step 1: Define Manufacturing CostsManufacturing Costs refer to the costs incurred in the production…

Q: Can you please solve this questions

A: The total asset turnover ratio measures how efficiently a company uses its assets to generate…

Q: Please provide problem with accounting question

A: Step 1: Definition of Total Asset TurnoverTotal asset turnover is a financial ratio that measures…

Q: Accounting

A: Step 1: Definition of Straight-Line DepreciationStraight-Line Depreciation is a method of…

Q: Don't use ai given answer with accounting question

A: Step 1: Definition of Cost of Goods Sold (COGS)The Cost of Goods Sold (COGS) represents the direct…

Q: Calculate the ending total assets balance

A: Step 1: Definition of Asset Turnover RatioThe Asset Turnover Ratio is a financial metric that…

Q: What is the amount of interest revenue?

A: To determine the interest revenue Felix Financial Services should record for the quarter ending…

Q: Can you help me solve this general accounting question using valid accounting techniques?

A: Step 1: Definition of Payment with DiscountWhen goods are sold with a discount term (e.g., 2/15), it…

Q: General accounting

A: Step 1: Definition of Cost of Goods Sold (COGS)Cost of Goods Sold (COGS) refers to the direct costs…

Q: Provide answer

Q: For the fiscal year, sales were $8,300,000, sales discounts were $100,000, sales returns and…

A: Concept of Sales:Sales refer to the total amount of revenue a business earns from selling its goods…

Q: At the year end ??? No solve incorrect values

A: The first step in calculating the applied overhead is to determine the predetermined overhead rate.…

Q: Analysts are projecting that Capital Railways will have earnings per share of $4.20. If the average…

A: The Price/Earnings (P/E) ratio is given by the formula:P/E Ratio = Price per Share ÷ Earnings per…

Q: Financial accounting

A: Step 1: Define Manufacturing CostsManufacturing costs refer to the total expenses incurred in the…

Q: Calculate the beginning inventory?

A: Definition of Beginning Inventory:Beginning inventory refers to the value of merchandise or…

Question

Please help me solve this general accounting question using the right accounting principles.

A stock has a beta of 1.35, the expected return on the
market is 12 percent, and the risk-free rate is 4.5 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 by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Similar questions

An analyst has modeled the stock of a company using the Fama-French three-factor model. The market return is 10%, the return on the SMB portfolio (rSMB) is 3.2%, and the return on the HML portfolio (rHML) is 4.8%. If ai = 0, bi = 1.2, ci = 20.4, and di = 1.3, what is the stock’s predicted return?
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?
A stock has a beta of 1.04, the expected return on the market is 11.75, and the risk-free rate is 3.75. What must the expected return on this stock be? Can the calculator and excel solution be provided?
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 14.1 percent, a beta of 1.8, and the return on the market is 9.8 percent. What must the risk-free rate be?
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 11.0%, its beta is 0.95, and the risk-free rate is 6.00%. What must the expected return on the market be?
A stock has a beta of 0.7 and an expected return of 7.3 percent. If the risk-free rate is 1.3 percent, what is the market risk premium?
A stock has an expected return of 9.9 percent, the risk-free rate is 1.8 percent, and the market risk premium is 4.3 percent. What must the beta of this stock be?
Stock X has a beta of 1.15 and an expected return of 11.1 percent. Stock Y has a beta of 1.2 and an expected return of 11.5 percent. What is the risk - free rate of return assuming that both stock X and stock Y are correctly priced?
A stock has a beta of 1.16, the expected return on the market is 11 percent, and the risk-free rate is 4.45 percent. What must the expected return on this stock be?
The risk-free rate is 6.8 percent, and stock A has an expected return of 15.8 percent. What is the beta of stock A?