Answered: AA Corporation's stock has a beta of…

AA Corporation's stock has a beta of 1.2. The risk-free rate is 3.75% and the expected return on the market is 12.92%. What is the required rate of return on AA's stock?

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 4P: An analyst has modeled the stock of a company using the Fama-French three-factor model. The market...

See similar textbooks

Related questions

Q: Q: fin accounting

A: Step 1:First calculate the net profit: Net profit = Sales * Profit margin = $813,200…

Q: Accounting expert help

A: Calculate the Current Profit per UnitMaxiDrive's current selling price per unit is $700, and the…

Q: The following information pertains to Ball Company: Manufacturing costs $24,00,000 Units…

A: Step 1: Definition of Gross MarginGross Margin is the difference between a company's sales revenue…

Q: Woheno Limited

A: 1Marginal income per unit is = Selling price per unit - Variable manufacturing cost per unit…

Q: Cap

A: Explanation of Working Capital: Working capital is the difference between current assets and current…

Q: Please give me answer accounting

A: Step 1: Define Balance Sheet EquationAs per the balance sheet equation, the net worth or equity…

Q: Answer it

A: Explanation of Bond DiscountA bond discount arises when bonds are issued for an amount less than…

Q: Please give me answer

A: To determine Ajay's profit from his gift-wrapping service, we first need to express his profit…

Q: CORIS RECREATION ASSEMBLY CORIS RA is a government owned enterprise which is legislated to generate…

A: Part AStatement of Cash FlowFor the year ended December 31, 2020(Amounts in $) CASH FLOWS FROM…

Q: go.1

A: Step 1: Allocate Joint Processing Costs Based on Sales Value at the Split-Off PointThe total joint…

Q: Need help with this financial accounting question not use chatgpt and ai

A: Step 1: Define Financial RatiosAn analysis of financial ratios is necessary to evaluate a business…

Q: Financial Accounting

A: Step 1: Define Accounts Receivable:Accounts receivable are the claims on sales that have been…

Q: Financial Accounting Solutions Please get The Help

A: Step 1: Define High low methodThe high low method is used to estimate the variable and fixed costs…

Q: Oneida Company's operations began in August. August sales were $180,000 and purchases were $120,000.…

A: 2.Schedule of Cash Payments for Direct Materials82% of purchases are paid in the month following the…

Q: Solve these general accounting question not use ai

A: The price/Earnings ratio is computed by dividing the stock price (market stock price) by Earnings…

Q: Please need answer the accounting question do fast and step by step calculation

A: Step 1:Information Given:Highest total cost (June): $85,000Lowest total cost (January):…

Q: P5-2 (Algo) Preparing a Statement of Stockholders' Equity LO5-3 At the end of the prior annual…

A: BARNARD CORPORATIONStatement of Stockholders' Equity Common…

Q: On January 4 2011, Bailey corp purchased 40% of the voting common stock.. Accounting

A: Step 1:- Define GoodwillAn intangible asset such as goodwill arises when a company acquires an asset…

Q: Hi expart Provide correct answer for this accounting question

A: Step 1: Understand the formulaThe formula for the materials price variance is:Materials Price…

Q: Please give me answer general accounting

A: Step 1: Define Cost AllocationThe manufacturing unit groups the activities in a department as per…

Q: None

A: Transaction A:Step 1: Calculate the total cash received.Cash received = 110,000 shares x…

Q: Financial Accounting

A: Step 1: Define Accounts Receivable Days OutstandingThe accounts receivable days outstanding (or days…

Q: I need answer of this question general accounting

A: Step 1: Define Asset TurnoverThe ratio of the sales of the company to the average operating assets…

Q: Hello Tutor Please give me Answer please

A: Step 1:Manufacturing overheads are the total of indirect Material, Indirect Labor and Indirect…

Q: 19) On February 1 of Year 1, a company received $100,000 cash from a one- year bank loan. The…

A: Journal entry to record the adjustment entry for interest expense is given…

Q: Whispering Company began operations on January 1, 2023, and uses the average-cost method of pricing…

A: Detailed explanation:Journal entry : Record increase in inventory value by debit Inventory $…

Q: Arden Company reported the following costs and expenses for the most recent month: solve this…

A: Step 1: Define Total Manufacturing CostIn cost accounting, the total manufacturing cost refers to…

Q: Please provide answers in excel and step by step explanation

A: Question 1a: Move Away from Just-in-Time Traditionally, the JIT inventory strategy focused on stock…

Q: Need answer with Explanation

A: What Are Derivatives?Derivatives are contracts between two parties whose value is derived from the…

Q: Subject: Account. Craig, a used car dealer is thinking about buying a 4 year old car. He customarily…

A: Step 1: Understand the ProblemCraig sells cars for 125% of his purchase cost. This means:…

Q: Smith, which began business at the start of the current year, had the following data: Planned and…

A: Step 1: Key Formula for Gross Margin Gross Margin=Sales Revenue−Cost of Goods Sold (COGS)…

Q: Zolezzi Incorporated is preparing its cash budget for March. The budgeted beginning cash balance is…

A: Beginning Cash Balance: $28,000 Add: Cash Receipts: +$103,000Total Cash Available: $28,000 +…

Q: Ai answer will be rejected

A: Step 1:To calculate the total cost recorded on the job cost sheet for Job 915, we need to add up the…

Q: Please give me answer general accounting

A: Step 1: Define Total AssetsTotal assets are the sum of all current and non-current assets owned by…

Q: Use the Black-Scholes formula for the following stock: Time to expiration Standard deviation…

A: Calculate d1Start by finding the ratio of the stock price to the exercise price and taking the…

Q: Cool

A: To solve the problem of finding the break-even number of units for Cool Electronics, we can use the…

Q: The attached picture is Lannister Salon's Comprehensive income for the years 2022-2023. Here are the…

A: The computations and classifications of accounts appear to be correct. The changes in each account…

Q: Need help with this accounting question not use chatgpt

A: Step 1: Define Long Term LiabilityLong-term liabilities are those liabilities that a company is…

Q: The charges to Work in Process-Assembly Department for a period, together with information…

A: Cost of Beginning Work in Process Inventory Completed this PeriodThe beginning work in process (WIP)…

Q: Listed below

A: Step 1: Calculate the Cost of Goods ManufacturedThis represents the units completed during the…

A: Statement of cash flows for Alter Company using the indirect method: Operating…

Q: Variable Costing

A: Option a: This option is incorrect because in variable costing, fixed manufacturing costs are…

Q: In group reorganizations, common control transactions are accounted for using which accounting? a)…

A: Explanation of Common Control Transactions: Common control transactions occur when businesses or…

Q: ra.3

A: Explanation showing the Calculation of pension expense for Oriole for 2025 by preparing a pension…

Q: account expert accept

A: Step 1: Understanding the ComponentsPurchase Cost for 8 Widgets: $40.00Enhancement Cost per Widget:…

Q: Please give me answer accounting

A: Step 1: Define Return on AssetReturn on asset calculates how the assets are utilized by a company in…

Q: Acquisition accounting

A: Explanation of Legal Acquirer:The legal acquirer is the entity that formally and legally acquires…

Q: I want answer

A: Ans. ) Given the question is related to the concept of the learning curve.The learning curve can be…

Q: The attached pic is Lannister Salon's Comprehensive Income from 2022-2023. Here are the following…

A: Upon reviewing the computations and classification of accounts, it appears that they have been…

Q: answer

A: Explanation of Activity-Based Costing (ABC): Activity-based costing is a costing methodology that…

Question

Financial Accounting

AA Corporation's stock has a beta of 1.2. The risk-free
rate is 3.75% and the expected return on the market
is 12.92%.
What is the required rate of return on AA's stock?

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

AA Corporations stock has a beta of 0.8. The risk-free rate is 4%, and the expected return on the market is 12%. What is the required rate of return on AAs stock?
AmDa’s common stock has a beta of 1.4. The market risk premium is 5% and the risk-free rate is 2%. What is the required rate of return on this stock according to CAPM?
FlavR Company stock has a beta of 2.14, the current risk-free rate is 2.14 percent, and the expected return on the market is 9.14 percent. What is FlavR Company's cost of equity?
Assume that the risk-free rate is 3.5% andthe market risk premium is 4%. What is the required return for the overall stock market?What is the required rate of return on a stock with a beta of 0.8?
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)?
Spider Corp has a beta of 1.7. The risk-free rate is 1.6% and the market risk premium is 5.2% .(Note market risk premium is rm- rf) What is the required return on Spider's stock according to the CAPM?
AA Corporation’s stock has a beta of 0.8. The risk-free rate is 4%, and theexpected return on the market is 12%. What is the required rate of return onAA’s stock?
B24&Co stock has a beta of 1.66, the current risk-free rate is 3.16 percent, and the expected return on the market is 10.66 percent. What is B24&Co's cost of equity?
CEPS Group stock has a beta of 0.95. The risk-free rate of return is 3.75 percent and the market risk premium is 6.75 percent. What is the expected rate of return on this stock?
A company's stock has a beta of 1.20, the risk-free rate is 1.6%, and the market risk premium is 16%. What is the firm's required rate of return? Do not round your intermediate calculations.
A stock has a beta of 1.38. The risk free rate is 0.817% and the market risk premium is 5%. What is the fair return on the stock?
Assume that the risk-free rate is 7.5% and the market risk premium is 3%. What is the required return for the overall stock market? Round your answer to one decimal place. _________ % What is the required rate of return on a stock with a beta of 1.8? Round your answer to one decimal place. _____________ %