Blast! stock has a beta of 1.4 and is currently selling for $16. Your DCF analysis indicates that Blast! will trade at $18.5 a year from today and you expect that the company will pay a dividend of $1 for the year. If the risk-free rate is 0.05, and the market risk premium is 0.1, what is the alpha of this stock?

Q: Assume that the risk-free rate is 5.5% and the market risk premium is 7%. What is the required…

A: In this we have to use capital assets pricing model to solve the problem.

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: A share of stock with a beta of 0.75 now sells for $50. Investors expect the stock to pay a year-end…

A: Expected Return = Risk free rate + Market risk premium * Beta

Q: AA Corporation's stock has a beta of 1.2. The risk-free rate is 6%, and the expected return on the…

A: Beta = 1.2Risk-free rate = 6% = 0.06Expected return on the market = 11% = 0.11

Q: The current risk-free rate of return, rRF, is 4 percent and the market risk premium, RPM, is 8…

A: The formula to calculate the required rate of return using CAPM is as follows:Return = Riskfree rate…

Q: A share of stock with a beta of 0.8 currently sells for $50. Investors expect the stock to pay a…

A: Expected Return = Risk free rate + Market risk premium * Beta

Q: are of stock with a beta of 0.78 currently sells for $53. Investors expect the stock to pay a…

A: The price of stock can be found out from the dividend growth discount model based on required rate…

Q: Suppose Peloton company's stock has a beta of 0.89 and a required rate of return for the stock is…

A: The risk-free rate, which is sometimes represented as the yield on government bonds, is the…

Q: Investors expect the market rate of return this year to be 16.50%. The expected rate of return on a…

A: In the given case, we have provided the expected market return rate, beta and the expected…

Q: A stock is currently selling for $90.98 and is expected to sell for $108.98 in 1 year. If the…

A: The return from an investment until it has been held with the investors is often referred to as the…

Q: You own $13,020 of Denny's Corporation stock that has a beta of 3.06. You also own $27,125 of Qwest…

A: Question 1 Market Risk Premium  The market risk premium is the rate of return on a risky investment.…

Q: Assume that Umbrella Corp. stock has a required rate of return (rs) = 31.  If 30 year T-Bonds are…

A: The ratio of the covariance of an individual stock return and market return by the variance of the…

Q: A stock just paid $3.2 dividend yesterday. The dividend is expected to grow at 2.0% per year…

A: Stock price is the selling price at which the stock trades on an exchange. It is the price which the…

Q: A stock is expected to pay a dividend of $1.26 at the end of the year. The required rate of return…

A: Formula: Current stock = Expected dividend/(Required rate - Growth rate)

Q: AA Corporation's stock has a beta of 0.8. The risk-free rate is 2%, and the expected return on the…

A: The required rate of return measure of the profitability of an investment and is used to evaluate…

Q: Your broker has recommended that you purchase stock in Alacan, Inc. She estimates that the 1-year…

A: Cost of equity = Rf + Beta * ( Rm - Rf ) = 2.70% + 0.91 * 9.50% = 2.70% + 8.645% = 11.345%

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: Suppose that you have estimated the CAPM betas for the equity shares of the following two firms:…

A: Capital Asset Pricing Model is used for determining the required rate of return or the cost of…

Q: Suppose that the risk-free rate is 3% and the expected return on the market portfolio is 6%. A…

A: To determine if the stock is overpriced or underpriced according to the Capital Asset Pricing Model…

Q: Blast! stock has a beta of 0.8 and is currently selling for $22. Your DCF analysis indicates that…

A: In finance, the term “Alpha” represents a financial ratio that helps to measure the maximum return…

Q: You are thinking of buying a stock priced at $106 per share. Assume that the risk-free rate is about…

A: according to CAPM: Rstock =rf+β×rm-rfwhere,rf= risk free raterm= market return

Q: The risk-free rate of return is 4%, the required rate of return on the market is 12%, and High-Flyer…

A: To calculate the price at which a share should sell using the dividend discount model (DDM), we need…

Q: What is the required rate of return on AA's stock?

A: Required rate of return (RRR) is the least required rate at which an investor will agree to invest…

Q: Target Corporation stock has a beta of 1.25, and Walmart stock has a beta of 0.5. If the expected…

A: The expected return for each stock is calculated using following CAPM(Capital asset pricing model)…

Q: A stock is expected to pay a dividend of $1.27 at the end of the year. The required rate of return…

A: Formula: Current stock price = Expected dividend / (Required return - Growth rate)

Q: You want to invest in Costco Stock and would like to know the potential returns of the stock. You…

A: The estimated rate of return is the return that an investor is expecting on its investments. It is…

Q: An analyst at PJ Dealers estimates that the CAPM beta for ZLX stock is 1.9. Given this information…

A: Given: Risk free rate = 2% Market rate = 12% Beta = 1.9

Q: Sha  is expected to pay a dividend of 1.00 at the end of the year. The market's risk free rate is…

A: Stock price refers to the market value of the stock. Stock price is influenced by many external and…

Q: What is the required rate of return on AA's stock?

A: Required Rate of Return: It is the minimum rate acceptable by the investor for owning the stock of…

Q: You are considering an investment in Justus Corporation's stock, which is expected to pay a dividend…

A: Dividend for year 1 = d1 = $2Beta = b = 0.9Risk free Rate = rf = 5.8%Market Risk Premium = mrp =…

Q: The common stock of Up-Towne Movers is selling for $33 a share and has a beta of 1.25. If the CAPM…

A: Given information in the question Current price              = $33 Beta…

Q: Assume that the risk-free rate of interest is 3% and the expected rate of return on the market is…

A: Risk free rate = 3% Market return = 16% Beta = 1.30 Expected return = Risk free rate+Beta*(Market…

Q: The market rate of return is 12.5% and the risk-free rate is 3.5%. What will be the change in a…

A: Expected return = Risk free rate + beta * (market rate -risk free rate)

Q: A stock has a Beta of 1.2, the T-Bill is returning 2.5% annually and the market return is 9%. If…

A: Return on equity = Risk free Rate + Beta * (Market Return - Risk free Rate)

Q: The stock of Wiley United has a beta of 0.92. The market risk premium is 8.6% and the risk-free rate…

A: Given the following information: Beta: 0.92 Market risk premium: 8.6% Risk free rate: 2.2%

Q: Assume that the risk-free rate is 7.5% and the market risk premium is 8%. What is the required…

A: The required rate of return can be ascertained by using the Capital Asset Pricing Model (CAPM). The…

Q: You are thinking of buying a stock priced at $98 per share. Assume that the risk-free rate is about…

A: Holding period return = Dividend paid + ( Price at year 1 - Price at year 0 ) / Price at year 0

Q: What should be the market price of the stock?   $     If the current market price of the stock is…

A: Share Price: The price of a share is an indication of its present value to buyers and sellers.…

Q: A share of stock with a beta of 0.77 now sells for $52. Investors expect the stock to pay a year-end…

A: Beta = 0.77 Risk free Rate = 4% Market Risk Premium = 7% Expected Return = risk free rate + beta *…

Q: AA Corporation's stock has a beta of 1.1. The risk-free rate is 3%, and the expected return on the…

A: We will use the CAPM (Capital Asset Pricing Model) here. The CAPM model essentially describes the…