Assume that the risk-free rate is 2.5% and the required return on the market is 8%. What is the required rate of return on a stock with a beta of 3? Round your answer to two decimal places.
Q: A stock has a required return of 12%, the risk-free rate is 2.5%, and the market risk premium is 5%.…
A: The Capital Asset Pricing Model (CAPM) is a model that describes the relationship between the…
Q: A stock has an expected return of 12.4%, the risk-free rate is 6.5%, and the market risk premium is…
A: In the given problem we require to calculate the Beta of the stock using following details: Expected…
Q: A stock has a required return of 15%, the risk-free rate is 7.5%, and the market risk premium is 5%.…
A: CAPM states that the return of the stock and the systematic risk associated with the stock are…
Q: Stock R has a beta of 1.5, Stock S has a beta of 0.95, the required return on an average stock is…
A: Required rate of return is defined as the minimum return regarding an investor, which is used to…
Q: A stock has a beta of 1.88. The risk free rate is 1.775% and the market risk premium is 5%. What is…
A: The Capital Asset Pricing Model (CAPM) is a mathematical model that describes the relationship…
Q: A stock has a required return of 13%, the risk-free rate is 6.5%, and the market risk premium is 3%.…
A: Capital Asset pricing Model (CAPM) is used to determine the required rate of return on investment…
Q: Johnson Corporation stock has a beta of 0.74. What is its expected return?
A: As per the Capital Asset pricing model expected return can be calculated using the formula given…
Q: A stock has a required return of 13%, the risk-free rate is 3%, and the market risk premium is 6%.…
A: Beta means the measure of changes in the stock in connection with the entire market. Beta is…
Q: Assume the risk-free rate is 5% and the market return is 12%. If inflation increases in the market…
A: A line that is drawn on a chart to depict the capital asset pricing model graphically is called the…
Q: Stock A has a beta of 1.62 and an expected return of 19.1 percent. Stock B has a beta of 1.02 and an…
A: The Capital Asset Pricing Model (CAPM) is a financial model that describes the relationship between…
Q: Suppose rRF = 4%, rM = 9%, and rA = 10%. Calculate Stock A's beta. Round your answer to one…
A: Required Return = Risk free Rate + beta * Market Risk Premium Market Risk Premium = Market Return -…
Q: Suppose the risk-free return is 4.2% and the market portfolio has an expected return of 11.4% and a…
A: Expected return = Risk free rate + beta * (market return -risk free rate )
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: A stock has a beta of 1.61, the expected return on the market is 0.07, and the risk-free rate is…
A: Return on stock :— It is the rate of return expected by the investors of stock. According to CAPM…
Q: Assume that the risk-free rate is 6.5% and the market risk premium is 5%. What is the required…
A: Solution:-Capital Asset Pricing Model (CAPM) is a model which gives a formula to calculate the…
Q: Suppose the risk-free return is 6.3% and the market portfolio has an expected return of 11.5% and a…
A: The objective of the question is to calculate the expected return of Johnson & Johnson…
Q: A certain stock has a beta of 1.3. If the risk-free rate of return is 3.9 percent and the market…
A: Expected return on a stock implies the returns expected on a stock after taking into consideration…
Q: risk-free rate is 6.5% and the required return on the market is 9%. What is the required rate of…
A: Required rate is expected rate of stock based on the beta of stock that is risk related to the…
Q: Assume that the risk-free rate is 4% and the required return on the market is 11%. What is the…
A: Risk free rate = 4% Market return = 11% Beta = 1.39
Q: Stock R has a beta of 1.5, Stock S has a beta of 0.85, the required return on an average stock is…
A: Investors want to be compensated for risk and time worth of money. The risk-free rate in the CAPM…
Q: A stock has a beta of 0.73, the expected return on the market is 0.08, and the risk-free rate is…
A: To calculate the expected return on the stock by using the capital of surprising model we use the…
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: A stock has an expected return of 15.9 percent and a beta of 1.70, and the expected return on the…
A: The Capital Asset Pricing Model (CAPM) refers to the model which tells us how the financial markets…
Q: Calculate each stock's required rate of return. Round your answers to two decimal places. rx = ry…
A: Introduction: Capital asset pricing model is the widely used financial model which is used in…
Q: A stock has an expected return of 10.99 percent, the risk-free rate is 2.46 percent, and the market…
A: Expected return = 10.99%Risk-free rate = 2.46%Market risk premium = 4.95%To find: Beta of the stock.…
Q: Assume that the risk-free rate is 7.5% and the required return on the market is 13%. What is the…
A: In the Given Question we require to calculate the required rate of return on a stock using following…
Q: A stock has a required return of 11%, the risk-free rate is 3.5%, and the market risk premium is 5%.…
A: The objective of the question is to calculate the beta of the stock and to understand the impact of…
Q: A stock has an expected return of 7.72 percent, the risk-free rate is 2.9 percent, and the market…
A: We can calculate Beta by using the CAPM model as it helps in showing the relationship between the…
Q: Stock R has a beta of 1.4, Stock S has a beta of 0.95, the expected rate of return on an average…
A: The required return of the stock is calculated using the Capital asset pricing model(CAPM ). The…
Q: A stock has an expected return of 16.4%, its beta is 1.3, and the expected return on the market is…
A: Following details are given to us in the question: Expected return of stock = 16.4% Beta = 1.3…
Q: A stock has a required return of 9%; the risk- free rate is 4%; and the market risk premium is 3%.…
A: In the given question we are require to calculate the Beta: We can calculate the Beta using Capital…
Q: Stock R has a beta of 2.0, Stock S has a beta of 0.75, the required return on an average stock is…
A: Given, The Beta of Stock R is 2 The beta of stock S is 0.75 Average stock return is 14% Risk free…
Q: A stock has a required return of 7%; the risk- free rate is 3.0%; and the market risk premium is 3%.…
A: Following details are given in the question : Required return on stock = 7% Risk free rate = 3%…
Q: Assume that the risk-free rate is 7.7% and the market return is 10%. Calculate the expected rate of…
A: The required return is calculated using the CAPM model capital asset pricing model according to…
Q: Required Rate of Return Stock R has a beta of 1.8, Stock S has a beta of 0.35, the expected rate of…
A: Beta coefficient shows the systematic risk of the assets. The beta factor shows the systematic risk…
Q: A stock has a beta of 1.08, the expected return on the market is 0.09, and the risk-free rate is…
A: Here, Beta = 1.08 Expected return on the market = 0.09 Risk-free rate = 0.06 To Find: Expected…
Q: Stock R has a beta of 1.5, Stock S has a beta of 0.85, the required return on an average stock is…
A: The objective of the question is to find out the difference in the required returns of two stocks…
Q: Stock R has a beta of 2.5, Stock S has a beta of 0.65, the required return on an average stock is…
A: The Beta of Stock R is 2.5 The beta of stock S is 0.65 Average stock return is 14% Risk free rate is…
Q: A stock has an expected return of 15.2 percent, the risk-free rate is 3.4 percent, and the market…
A: As per CAPM model, expected return = risk free rate + beta*market risk premium
Q: A stock has a required return of 13%, the risk-free rate is 2.5%, and the market risk premium is 4%.…
A: Beta shows the risk related to the overall risk of the market and it shows how much volatility is in…
Q: Assume that the risk-free rate is 6.4% and the market return is 8%. Calculate the expected rate of…
A: Risk free rate = 6.4% Market return = 8% Beta = 3 (Assumed % sign is a clerical error)
Q: Suppose rRF = 3%, rM = 8%, and rA = 7%. Calculate Stock A's beta. Round your answer to one…
A: We will use the CAPM model here. CAPM is the capital asset pricing model. This model describes the…
Q: A stock has a required return of 16%, the risk-free rate is 5.5%, and the market risk premium is 4%.…
A: A model that represents the relationship of the required return and beta of a particular asset is…
Q: Assume that the risk-free rate is 7.5% and the required return on the market is 9%. What is the…
A: Given that:Risk free rate = 7.5%Required market return = 9%Beta = 3To compute the return
Q: Assume that the risk-free rate is 6.5% and the market risk premium is 8%. What is the required…
A: The CAPM is used to find out the return of a stock based on the systematic risk the stock faces and…
Q: If the interest rate on T Bills is 2% and the market risk premium is 6%, what is the CAPM-implied…
A: interest rate on T-bills or risk free rate is 2% Market risk premium is 6% Beta is 1.25 To Find:…
Q: Stock X has a beta of 2.5, Stock B has a beta of 0.65, the required return on an average stock is…
A: A model that represents the relationship of the required return and beta of a particular asset is…
Assume that the risk-free rate is 2.5% and the required return on the market is 8%. What is the required
![](/static/compass_v2/shared-icons/check-mark.png)
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
- A stock has an expected return of 11.4%, the risk-free rate is 5.5%, and the market risk premium is 11%. What must the beta of this stock be? (Do not round intermediate calculations. Round your answer to 2 decimal places.)Consider the following table, which gives a security analyst’s expected return on two stocks and the market index in two scenarios: Scenario Probability Market Return Aggressive Stock Defensive Stock 1 0.5 6% 2.0% 5.0% 2 0.5 20 32 15 Required: a. What are the betas of the two stocks? (Round your answers to 2 decimal places.) Beta A : Beta D: b. What is the expected rate of return on each stock? (Round your answers to 2 decimal places.) % Rate of Return on A: % Rate of Return on B:A stock's beta is 1.5 and the market risk premium is 5.6%. If the risk-free rate is 2.9%, what is the stock's required return according to CAPM? Answer as a percent and round to 2 decimal places. Answer:
- Stock R has a beta of 2.0, Stock S has a beta of 0.35, the required return on an average stock is 9%, and the risk-free rate of return is 3%. By how much does the required return on the riskier stock exceed the required return on the less risky stock? Round your answer to two decimal places. %Stock R has a beta of 1.7, Stock S has a beta of 0.8, the required return on an average stock is 13%, and the risk-free rate of return is 5%. By how much does the required return on the riskier stock exceed the required return on the less risky stock? Round your answer to two decimal places.Stock R has a beta of 1.5, Stock S has a beta of 0.85, the required return on an average stock is 9%, and the risk-free rate of return is 3%. By how much does the required return on the riskier stock exceed the required return on the less risky stock? Round your answer to two decimal places.
- A stock has an expected return of 12.7 percent, its beta is 1.80, and the risk-free rate is 3.2 percent. What must the expected return on the market be? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)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. _____________ %Using the CAPM, estimate the appropriate required rate of return for the three stocks listed here, given that the risk-free rate is 4 percent and the expected return for the market is 17 percent. STOCK BETA A 0.63 B 0.95 C 1.48 a. Using the CAPM, the required rate of return for stock A is B.Using the CAPM, the required rate of return for stock b is C.Using the CAPM, the required rate of return for stock C is (Round to two decimal places.)
- Consider the following table, which gives a security analyst’s expected return on two stocks and the market index in two scenarios: Scenario Probability Market Return Aggressive Stock Defensive Stock 1 0.5 6% 2.0% 5.0% 2 0.5 20 32 15 Required: a. What are the betas of the two stocks? (Round your answers to 2 decimal places.) b. What is the expected rate of return on each stock?Please show working Please answer ALL OF QUESTIONS 1 AND 2 1. Assume that the risk-free rate is 3.5% and the market risk premium is 8%. a. What is the required return for the overall stock market? Round your answer to two decimal places. __________ % b. What is the required rate of return on a stock with a beta of 2.4? Round your answer to two decimal places. __________ % 2. An individual has $50,000 invested in a stock with a beta of 0.8 and another $55,000 invested in a stock with a beta of 2.0. If these are the only two investments in her portfolio, what is her portfolio's beta? Do not round intermediate calculations. Round your answer to two decimal places._______Assume that the risk-free rate is 5.5% and the market risk premium is 7%. 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 1.9? Round your answer to one decimal place. %
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
![Horngren's Cost Accounting: A Managerial Emphasis…](https://www.bartleby.com/isbn_cover_images/9780134475585/9780134475585_smallCoverImage.gif)
![Intermediate Accounting](https://www.bartleby.com/isbn_cover_images/9781259722660/9781259722660_smallCoverImage.gif)
![Financial and Managerial Accounting](https://www.bartleby.com/isbn_cover_images/9781259726705/9781259726705_smallCoverImage.gif)
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
![Horngren's Cost Accounting: A Managerial Emphasis…](https://www.bartleby.com/isbn_cover_images/9780134475585/9780134475585_smallCoverImage.gif)
![Intermediate Accounting](https://www.bartleby.com/isbn_cover_images/9781259722660/9781259722660_smallCoverImage.gif)
![Financial and Managerial Accounting](https://www.bartleby.com/isbn_cover_images/9781259726705/9781259726705_smallCoverImage.gif)