Alpha Company has a beta of 3.25 and a standard deviation of returns of 27%. The return on the market portfolio is 13% and the risk free rate is 5%. What is the risk premium on the market? According to CAPM, what is the required rate of return on stock?

Q: The risk-free rate is 3.4 percent and the market expected return is 11.9 percent. What is the…

A: The expected return of a stock can be found out using the CAPM formula. Given, Rf = Risk free…

Q: A stock's beta is 1.8 and the market risk premium is 6.6%.  If the risk-free rate is 3.1%, what is…

A: The risk premium refers to the extra return over the risk-free rate that the stock provides for its…

Q: (Expected rate of return and risk) Syntex, Inc. is considering an investment in one of two common…

A: Stock AStock BProbabilityReturnProbabilityReturn0.3513%0.15-6%0.3014%0.357%0.3518%0.3516%0.1520%

Q: Apex Roofing's stock has a beta of 1.50, its required return is 14.00%, and the risk-free rate is…

A: In the given question we need to compute the required rate of return on stock market from following…

Q: CAPM Elements Risk-free rate (RF) Market risk premium (RPM) Happy Corp. stock's beta Required rate…

A: The capital asset pricing model aids analysts and investors in calculating the expected return on…

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: The expected return for a stock, calculated using the CAPM is 13.5%. The risk free rate is 7.5% and…

A: In the given problem we are required to calculate the implied return on market using following…

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: Following details are given in the question: Risk free rate = 5.6% Market Risk premium = 8.5%…

Q: Industry stock has a beta of 1.8, the risk-free rate is 4.40%, and the market risk premium (MRP) is…

A: CAPM stands for Capital Asset Pricing Model which indicates the relation between the expected…

Q: Moerdyk Company's stock has a beta of 1.5, the risk - free rate (rRFR) is 4%, and the market risk…

A: The objective of the question is to calculate the required rate of return for Moerdyk Company's…

Q: Zacher Co.'s stock has a beta of 0.82, the risk-free rate is 4.25%, and the market risk premium is…

A: Required rate of return = Risk free rate + beta * market risk premium

Q: jerilu markets has a beta of 1.23 the risk free rate of return is 2.10 percent and the market rate…

A: Step 1 The investment return that an asset is anticipated to generate over and above the risk-free…

Q: Steady Company's stock has a beta of 0.24. If the risk-free rate is 6.1% and the market risk premium…

A: Solution:- Company’s cost of equity means the minimum rate of return required by the equity…

Q: The stock in Bowie Enterprises has a beta of 1.10. The expected return on the market is 12.40…

A: Beta of stock = 1.10 Market return = 12.40% Risk free rate = 3.21%

Q: Calcitron Inc. has common stock with a beta of 1.4. The risk-free rate is 3.7 while the market rate…

A: Required rate is rate which is expected by investors and can be calculated based on the risk…

Q: what is the stock's predicted return

A: Market return is 10%return on the SMB portfolio (rSMB) is 2.0 return on the HML portfolio (rHML) is…

Q: The current risk-free rate of return is 2.5 percent and the market risk premium is 5 percent. If the…

A: The return which the investors are expected in order to invest in specific securities is referred to…

Q: Assume the following information about the market and Lithium Motors Stock.​ Lithium's beta​ = 1.80,…

A: Beta (b) = 1.80 Risk free rate (Rf) = 0.025 Market risk premium (Mp) = 0.08 Expected return = ?…

Q: The standard deviation of returns of a particular stock is 43% and that of the market is 35%. The…

A: Beta measures the market risk of any stock. A beta can be negative, positive, 0 or 1. A beta of 1…

Q: A stock has an expected return of 7.8 percent. The expected return on the market is 9 percent and…

A: Beta less than 1 signifies less systematic risk.

Q: (i) Potpuri Inc Stock has a beta of 1.7 and an expected return of 16.7% under CAPM. What is the…

A: Capital Asset Pricing Model (CAPM) is a financial approach that helps to determine the expected…

Q: A share has a beta of 0.90, the expected return on the market is 8.5% and the risk-free rate is 2.2%…

A: Beta = 0.90 Market return = 8.5% Risk free rate = 2.2%

Q: Cooley Company's stock has a beta of 0.8 , the risk-free rate is 1.04 %, and the market risk premium…

A: The Capital Asset Pricing Model (CAPM) refers to the model which tells us how the financial markets…

Q: a. What is the market risk premium? Show your work. b. What is the cost of equity for XYZ? Show your…

A: Please note that only 1 question can be solved under the Answering Guidelines. The solution to stock…

Q: You are using the CAPM to calculate a fair return for Stardust Inc. common stock. The market has a…

A: Beta is the measure of the systematic risk of a stock. It measures the volatility of the stock with…

Q: A stock has an expected return of 14.1 percent, a beta of 1.8, and the return on the market is 9.8…

A: Expected return (Re) = 14.1% Beta (B) = 1.8 Market return (Rm) = 9.8% Risk free rate = Rf

Q: Find risk free rate and expected return of market portfolio based on the following information -…

A: Expected return (CAPM) = Rf+β*Rp.Rf = Risk free rate.Rp = Risk premium.

Q: A firm's stock has a beta of 1.7. The expected T-bill return is 3.7%. and the expected market return…

A: Risk-free rate(expected T-bill return) = 3.7%Beta = 1.7Expected market return = 7%

Q: Suppose the risk-free return is 2.3% and the market portfolio has an expected return of 11.7% and a…

A: Beta = (Correlation with market x Volatility of stock)/ Volatility of marketBeta = (0.045 x 17.3)/…

Q: The risk-free rate of return is 3.75 percent and the market risk premium is 6.5 percent. What is the…

A: Risk free rate of return = rf = 3.75% Market risk premium = mrp = 6.5% Beta = b = 0.84

Q: The risk-free rate of return is currently 0.03, whereas the market risk premium is 0.04. If the beta…

A: Following details are given in the question: Risk free rate of return = 0.03 = 3% Market Risk…