Assume that the risk-free rate is 6% and the expected return on the market is 10%. What is the required rate of return on a stock with a beta of 1.6? Round the answer to two decimal places.
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- What is the required return on an investment with a beta of 1.4 if the risk-free rate is 2.2 percent and the return on the market is 7.0 percent? Round your answer to two decimal places. %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.Assume that the risk free rate is currently 3% and that the market retunr is currently 11%. Calculate the market risk premium Give the previous datea, calculate the required retun on asset A having a beta of 0.3 and asset B having a beta of 1.5.
- 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?Crimson Co. has a beta equal to 1.29 and a required return of 0.147 based on the CAPM. If the market risk premium is 0.041, the risk-free rate of return is Instruction: Type your answer as a decimal, and round to three decimal placesAsset A has an expected return of 10%. The expected market return is 14% and the risk-free rate is 5%. What is asset A's beta? Select one: O a. 0.88 O b.0.67 O C. 0.55 O d.o.33 O e. 1.15
- The current appropriate risk-free rate is 6% and the return on the market is 13.5%.Further assume that you calculated the levered beta above as 1.29. Using the CAPM, estimate DUC’s cost of equity. Be sure to state any additional assumptions.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?8. Assume the risk-free rate is 6.7% and the expected return on the market portfolio is 7.8%. Use the capital asset pricing model (CAPM) to find the required return for each of the securities in the table here, 7. Review On Click the icon to see the Worked Solution. The required return for investment A is %. (Round to one decimal place.) The required return for investment B is %. (Round to one decimal place.) The required return for investment C is %. (Round to one decimal place.) The required return for investment D is %. (Round to one decimal place.) The required return for investment E is %. (Round to one decimal place.) 7: Data Table (Click on the icon here in order to copy its contents of the data table below into a spreadsheet.) Security Beta A 1.34 в 0.93 0.13 0.96 E 0.67
- APT An analyst has modeled the stock of Crisp Trucking using a two-factor APT model. The risk-free rate is 6%, the expected return on the first factor (r1) is 12%, and the expected return on the second factor (r2) is 8%. If bi1 = 0.7 and bi2 = 0.9, what is Crisp’s required return?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?Capm