constant rate of 8 percent indefinitely. The beta of ABC stock is 1.0, the risk-free rate is 6 percent, and the market risk premium is 8 percent. a. What is the intrinsic value of the stock? b. What would be your estimate of intrinsic value if the stock is riskier, with a beta of 1.25?

Q: ssume that the risk-free rate is 6.5% and the required return on the market is 8%. What is the…

A: Required rate can be calculated from capital assets pricing formula.

Q: Assume that the risk-free rate is 2.5% and the required return on the market is 8%. What is the…

A: According to capital assets pricing model, The expected return on equity stock is calculated as…

Q: Assume rhat the risk-free rate is 5.5% and the market rate  premium is 6%. A) What is the required…

A: As per CAPM, Required rate of return = Risk free Rate + (beta * Market Risk premium)

Q: A stock has a required return of 13%; the risk- free rate is 5%, and the market risk premium is 4%.…

A: We have two parts in this question : In part (a) we need to calculate Stock's Beta . In part (b) we…

Q: What will happen to a​ stock’s risk premium if its beta doubles and the market risk premium​…

A: The objective of the question is to understand the impact on a stock's risk premium when both its…

Q: Assume that the risk-free rate is 6.00% and the market risk premium is 6.75%. What is the expected…

A: Given: Risk free rate=6% Market risk premium = 6.75%

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: A stock has an expected return of 15.7 percent, the risk-free rate is 6.25 percent, and the market…

A: Given The expected return is 15.7 percent Risk free rate is 6.25% Market risk premium is 7.6%

Q: The risk-free rate is 4%. The market risk-premium is 7%. The beta is 2.0. What is the expected rate…

A: Financial statements are statements which states the business activities performed by the company .…

Q: Assume that the risk-free rate is 6.5% and the required return on the market is 10%. What is the…

A: Risk free rate (Rf) = 0.065 Market return (Rm) = 0.10 Beta (b) = 3 Required rate of return = ?…

Q: Assume that the risk-free rate is 6.5% and the required return on the market is 10%. What is the…

A: To calculate the required rate of return on a stock, we need to use capital asset pricing model…

Q: Using CAPM A stock has an expected return of 13 percent, the risk-free rate is 4.5 percent, and the…

A: Given details are : Expected return = 13% Risk free rate = 4.5% Market risk premium = 7% We need to…

Q: The risk-free rate is 5 percent. Stock A has a beta = 1.0 and Stock B has a beta = 1.4. Stock A has…

A: In the given scenario, neither Stock A nor Stock B is overvalued. Instead, both stocks are…

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: Beta and required rate of return A stock has a required return of 11 percent; the risk-free rate is…

A: In the given question we require to compute the beta of stock from below details : Required return =…

Q: A stock has a beta of 1.38. The risk free rate is 0.817% and the market risk premium is 5%. What is…

A: Solution:- Capital Asset Pricing Model (CAPM) is the model which helps to compute the fair return on…

Q: The risk-free rate of return is 3.7 percent and the market risk premium is 6.2 percent. What is the…

A: The given question can be solved using capital asset pricing model (CAPM)

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: The expected return on stock A is 11.70 percent. The expected return on stock B is 9.40 percent.…

A: The objective of the question is to calculate the risk premium using the Capital Asset Pricing Model…

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: A stock's beta is 1.6 and the market risk premium is 7.7%.  If the risk-free rate is 3.5%, what is…

A: Capital Asset Pricing Model ( CAPM) is an alternative model to find out the required rate of return…

Q: Assume that the risk-free rate is 6.5% and the required return on the market is 8%. What is the…

A: Given: Risk free rate =6.5%Required rate on the market =8%Beta =0.6

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: The risk-free rate is 3% and the market risk premium is 9%.  If stock A has a beta of -0.9, what is…

A: Formulas: Required return = Risk free rate + (Beta*Market risk premium)

Q: 1.The risk-free rate of return is 2.6 percent and the market risk premium is 10 percent. What is the…

A: We need to find out the expected return of the stock by using Capital Asset Pricing Model (CAPM).…

Q: A stock has a beta of 1.2. The risk-free rate is 4%. Assume that the CAPM holds. A.  What is the…

A: Beta = 1.2Risk-free rate = 4%Capital Asset Pricing Model holds.

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: 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: Two stocks, A and B, have beta coefficients of 1.0 and 0.4, respectively. If the expected return on…

A:

Q: A stock has an expected return of 7.5%. Given a risk-free rate of 4.4% and a market return of 7%,…

A: The calculation of Beta, which is the measure of risk in the business. When we are using the capital…

Q: A stock has an expected return of 9.9 percent, the risk-free rate is 1.8 percent, and the market…

A: Expected return = 9.9% Risk free rate = 1.8% Market risk premium = 4.3%

Q: Stock A's stock has a beta of 1.30, and its required return is 12.00%. Stock B's beta is 0.80. If…

A: The objective of this question is to find the required rate of return on Stock B given its beta, the…

Q: A2) The risk-free rate of return is 2.8 percent, the inflation rate is 3.1 percent, and the market…

A: Answer  Formula for  Expected Return : ER  ER  = Rf + beta ( Rm - Rf )

Q: Assume the Black-Scholes framework. You are given: i. S (t) is the stock price at time t. ii. The…

A: The Black-Scholes model is a mathematical formula used to calculate the theoretical price of a…

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: required

A: Required rate of return = Risk free rate + Market risk premium * Beta

Q: Stock A has a beta of 1.30, and its required return is 13.25%.  Stock B's beta is 0.90.  If the…

A: Given Beta of Stock A = 1.30 Risk free Rate = 4.75% Required return of stock A = 13.25%

Q: 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…

A: The CAPM model refers to the relation between the systematic risk and the return of the stock. It is…

Q: A stock has an expected return of 11.0%, its beta is 0.95, and the risk-free rate is 6.00%. What…

A: In the given question we require to calculate the expected return on market from following details:…

Q: Assume that the risk-free rate is 2.5% and the required return on the market is 12%. What is the…

A: We need to use CAPM equation for calculation of required rate of return. The equation is…

Q: A stock has an expected return of 11.25 percent, a beta of 0.82, and the expected return on the…

A: Capital asset pricing model is used to compute the expected return from a stock: Here, Expected…