Everrest Inc.'s stock has a 53% chance of producing a 14.25% return, a 25% chance of producing a 27.50% return, and a 22% chance of producing a –4.25% return.  What is the firm's expected rate of return?Round your answer to two decimal places. For example, if your answer is $345.6671 round as 345.67 and if your answer is .05718 or 5.7182% round as 5.72. A. 15.52% B. 11.74% C. 13.49% D. 13.09% E. 14.98%

Q: The common stock of Anthony Steel has a beta of 1.5. The risk-free rate is 6 percent and the market…

A: Cost of common stock refers to the return to be earned by the stockholders in the company over the…

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: (Computing rates of return) From the following price data, compute the annual rates of return for…

A: - The rate of return is calculated by subtracting the beginning value from the final value, then…

Q: Wildings, Inc. common stock has a beta of 1.2. If the expected risk free return is .04 and the…

A: The expected return for an investor is the return that the investor anticipates or expects to…

Q: The PE ratlð is O A. how much a stock is expected to earn. O B. how much earnings are going to grow.…

A: The answer will be "c" - how much an investor is willing to pay for $1 of earnings.

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: expected

A: Introduction: Capital asset pricing model or CAPM as it is known widely is a tool which helps in…

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: You have the opportunity to buy a stock that just paid a dividend (D0) of $3.00.  After doing some…

A: Calculation:

Q: Everrest Inc.'s stock has a 44% chance of producing a 16.75% return, a 25% chance of producing a…

A: Expected return is that amount which is earned by the investor from his investment. It is calculate…

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: Diddy Corporation stock has a beta of 1.3, the current risk-free rate is 4 percent, and the expected…

A: To calculate Diddy Corporation's cost of equity, we can use the Capital Asset Pricing Model (CAPM).…

Q: You have $50,000 to invest in three stocks. Let Ri be the random variable representing the annual…

A: Let's denote the proportion of the total investment in each stock as follows:x1 = proportion of…

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: 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: 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: ou want to check if GRBH stock is fairly priced in the markets by using the fundamental analysis.…

A: given, EPS1=$5EPS2=$7dividend payout = 0.2PE =8r=10%

Q: Today, a firm has a stock price of $14.26 and an EPS of $1.15. Its close competitor has an EPS of…

A: The method of comparable is often used in finance for the purpose of valuation. This method is also…

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: 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…

Q: Skupos Inc.'s stock has a 40% chance of producing a 8% return, a 10% chance of producing a 8%…

A: The expected rate of return is the anticipated rate of return. The expected or the anticipated rate…

Q: A firm's stock has a beta of 1.7. The expected T-bill return is 3.7%. and the expected market return…

A: Risk-free rate(expected T-bill return) = 3.7%Beta = 1.7Expected market return = 7%

Q: Taggart Inc.'s stock has a 50% chance of producing a 36% return, a 30% chance of producing a 10%…

A: Expected rate of return = Sum of probability * Returns

Q: Arizona Inc.'s stock has a 60% chance of producing a 120% return, a 30% chance of producing a 80%…

A: The expected rate of return would be the weighed average return of the stock returns given at…

Q: A company has a beta of 0.6, the T-bill rate is 4.3%, and the expected return on the market  is…

A: The required rate of return can be calculated with the help of CAPM equation.

Q: The risk-free rate of return is 2 percent, and the expected return on the market is 6.1 percent.…

A: Value of stock can be determined based on the dividend and growth of dividend and required rate of…

Q: outlook for the comin Compute the expected rate of retum E(R) for Lauren Labs. Round your answer to…

A: Expected return is the sum of product between the possible returns and their corresponding…

Q: A stock is expected to pay a dividend of $1.76 at the end of the year. The required rate of return…

A: The dividend growth model will be used to calculate the stock price. This model values a company's…

Q: Everrest Inc.'s stock has a 46% chance of producing a 12.00% return, a 30% chance of producing a…

A: Formula: Expected return = Probability * return

Q: Flagstaff Inc.'s stock has a 42% chance of producing a 42% return, a 31% chance of producing a 31%…

A: Firm's expected rate of return is calculated using following equation Expected rate of return =…

Q: Taggart Inc's stock has a 50% chance of producing a 20% return, a 30% chance of producing a 10%…

A: The expected return is the estimation of profit or loss that an investor determines from his…

Q: (a) A financial analyst would like to study the stock market in Hong Kong. It is believed that the…

A: The complete table is given below.StemLeaf024123723323884001233446678951224668Explanation:A…

Risk and return

Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary. 

Capital Asset Pricing Model

Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.