Assume that the risk-free rate is 4% and the expected return on the market is 11%. What is the required rate of return on a stock with a beta of 2.3?
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- Consider an asset with a beta of 1.2, a risk-free rate of 4.3%, and a market return of 12%. What is the reward-to-risk ratio in equilibrium? What is the expected return on the asset?Assume that the risk-free rate, RF, is currently 9% and that the market return, rm, is currently 16%. a. Calculate the market risk premium. b. Given the previous data, calculate the required return on asset A having a beta of 0.4 and asset B having a beta of 1.8.Asset X has an expected return of 10% and volatility of 10% . If its Sharpe Ratio is 0.60, what is the risk-free rate?
- If X-Co has a Beta of 1.6, and the risk-free rate is 4.5%, and the average market risk premium is 6%, what is X-Co’s estimated required return per the CAPM? (show calculations)What is the expected return on asset A if it has a beta of 0.5, the expected market return is 13%, and the risk-free rate is 3%? O 6.5% 8% 9.5% 7% O 5%Suppose the CAPM is true. Consider two assets, X and Y, and the market M. Suppose cov(X,M) = .3, cov(Y,M) = .5. %3D (a) Is the expected return higher on X or Y? (b) Suppose var(M) = 1.5, what are the betas of X and Y? (c) Suppose the expected market return is 20% and the risk free rate is 5%, what is the expected returns of X and Y?. (d) Given your analysis in (a)-(c), what type of investor would prefer asset X to asset Y?
- Suppose there is a risk-free asset whose return is 2% and that the market portfolio has an expected return of 10%. The standard deviation of the market portfolio is given 25%.(a) Find the security market line.(b) Suppose there is an asset whose covariance with the market is given by 450%^2. Find its equilibrium price according to CAPM.The expected market return is 5%. The risk-free rate is 3%. According to the CAPM equation, what is the expected return on an asset which has alpha=1.5%, and beta=1.9 ? O a. 11.0% O b. 5.3% O c. 5% O d. 6.8% O e. 8.3%Suppose the risk-free rate is 8%. The expected return on the market is 16%. If a particularstock has a beta of 0.7, what is its expected return based on the Capital Asset PricingModel? If another stock has an expected return of 24%, what must its beta be?
- If the expected rate of return on AZNG is 12.72, its beta is 1.09 and the market risk premium is 8%, what is the risk-free rate?Asset A has an expected return of 22.8% and a beta of 1.8. The expected market return is 14%. What is the risk-free rate? 0.6% O1.2% 3.0% 4.0% 6.0%Suppose risk-free rate of return = 2%, market return = 7%, and Stock B’s return = 11%. a. Calculate Stock B’s beta. b. If Stock B’s beta were 0.80, what would be its new rate of return?