Need answer this financial accounting question Gambarini Financial Group has a stock with a beta of 1.8. The risk-freerate is 4.1%, and the expected return on the market is 13.5%.What is the required rate of return on Gambarini Financial Group'sstock?

Step 1: Definition of Capital Asset Pricing Model (CAPM)The Capital Asset Pricing Model (CAPM) is a…

Answered: Gambarini Financial Group has a stock…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 14P

See similar textbooks

Similar questions

An analyst has modeled the stock of a company using the Fama-French three-factor model. The market return is 10%, the return on the SMB portfolio (rSMB) is 3.2%, and the return on the HML portfolio (rHML) is 4.8%. If ai = 0, bi = 1.2, ci = 20.4, and di = 1.3, what is the stock’s predicted return?
Assume the following information about the market and Lithium Motors Stock. Lithium's beta = 1.80, the risk−free rate is 2.50%, the market risk premium is 8.0%. Using the SML, what is the expected return for the firm's stock?
If the expected return from the market is 18%, the risk-free rate is 11%, and the beta of Loschert Corp. is 1.2, what is the required rate of return on Loschert's stock?
Cooley Company's stock has a beta of 0.8 , the risk-free rate is 1.04 %, and the market risk premium is 5.46 %. What is the firm's required rate of return?
Moerdyk Company's stock has a beta of 1.5, the risk - free rate (rRFR) is 4%, and the market risk premium (rM rRFR) is 9%. What is the firm's required rate of return?
a) Astock has expected return of 10% and a beta of 0.70. Assume the risk - free rate is 5.5%. what must the expected return on the market be? b ) A stock has expected return of 15%, its beta is 1.45, and the expected return on the market is 12%. What must the risk - free rate be?
Suppose the risk free rate is 2, 32%, the expected return of the market portfolio is 5, 64% and the beta of stock X-Bros S. A. is 1. 10. What is the expected cost of equity of X-Bros S. A. (in percent)?
What must the expected return on this stock be? Please answer the financial accounting question
Chance Inc's stock has an expected return of 12.25%, a beta of 1.5, and is in equilibrium. If the nominal risk-free rate is 4.00%, what is the market risk premium? What is the equity risk premium?
A company's stock has a beta of 1.20, the risk-free rate is 1.6%, and the market risk premium is 16%. What is the firm's required rate of return? Do not round your intermediate calculations.
Suppose the risk-free return is 2% and the market portfolio has an expected return of 12% and a volatility of 16%. Merck & Co. (Ticker: MRK) stock has a 25% volatility and a correlation with the market of 0.8. What is Merck’s beta with respect to the market? Under the CAPM assumptions, what is its expected return?
Fiske Roofing Supplies' stock has a beta of 1.23, its required return is 12.00%, and the risk-free rate is 4.30%. What is the required rate of return on the market? (Hint: First find the market risk premium.)

SEE MORE QUESTIONS

Recommended textbooks for you

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

Intermediate Financial Management (MindTap Course…

Finance

ISBN:

9781337395083

Author:

Eugene F. Brigham, Phillip R. Daves

Publisher:

Cengage Learning

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

Intermediate Financial Management (MindTap Course…

Finance

ISBN:

9781337395083

Author:

Eugene F. Brigham, Phillip R. Daves

Publisher:

Cengage Learning

SEE MORE TEXTBOOKS

Gambarini Financial Group has a stock with a beta of 1.8. The risk-free rate is 4.1%, and the expected return on the market is 13.5%. What is the required rate of return on Gambarini Financial Group's stock?