If the expected return on the market is 10.19 percent, the inflation rate is 1.11 percent, the risk-free rate is 2.10 percent, and Big Madden common stock has abeta of 2.36, then what is the expected return for Big Madden stock?20.08% (plus or minus 4 bps)23.53% (plus or minus 4 bps)19.09% (plus or minus 4 bps)21.19% (plus or minus 4 bps)None of the above is within 4 bps of the correct answer

Option d: This option is correct. Step 1:We have to calculate the expected return of the stock.The…

Answered: If the expected return on the market is…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 14P

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Now assume that the stock is currently selling at $30.29. What is its expected rate of return?
If the expected return on the market is 9.38 percent, the inflation rate is 0.63 percent, the risk - free rate is 2.95 percent, and Big Madden common stock has a beta of 1.06, then what is the expected return for Big Madden stock?
The risk-free return is 4.43%, the inflation rate is 3.29%, and the expected return on the market is 12.00%. What is the expected real return for Hantz stock if it has a beta of 1.27? O 4.14% (plus or minus 38 bps) 10.41% (plus or minus 38 bps) 9.21% (plus or minus 38 bps) 8.43% (plus or minus 38 bps) None of the above is within 38 bps of the correct answer
suppose the common stock of United Industries has a beta of 1.19 and an expected return of 11.8 percent. The risk-free rate of return is 3.5 percent while the inflation rate is 2.6 percent. What is the expected market risk premium? round to 2 decimal places,
The current risk-free rate of return, rRF, is 4 percent and the market risk premium, RPM, is 8 percent. If the beta coefficient associated with a firm's stock is 1.6, what should be the stock's required rate of return? Round your answer to one decimal place. ´%
A stock has an expected return of 15 percent. Beta is 0.75. And the risk-free rate is 75 percent. What must the expected return on the market be? (a) 18.38 % (b) 18.20 % (c) 10.00 % (d) 16.63 % (e) 17.50 %.
Consider a three-factor APT model. The factors and associated risk premiums are: Factor Risk Premium (%) Change in gross national product (GNP) +6.9 Change in energy prices 0.4 Change in long-term interest rates +2.6 Calculate expected rates of return on the following stocks. The risk-free interest rate is 4.8%. A stock whose return is uncorrelated with all three factors. (Enter your answer as a percent rounded to 1 decimal place.) A stock with average exposure to each factor (i.e., with b = 1 for each). (Enter your answer as a percent rounded to 1 decimal place.) A pure-play energy stock with high exposure to the energy factor (b = 1.9) but zero exposure to the other two factors. (Enter your answer as a percent rounded to 2 decimal places.) An aluminum company stock with average sensitivity to changes in interest rates and GNP, but negative exposure of b = –1.9 to the energy factor. (The aluminum company is energy-intensive and suffers when energy prices…
The current risk-free rate of return, rRF, is 2 percent and the market risk premium, RPM, is 8 percent. If the beta coefficient associated with a firm's stock is 1.4, what should be the stock's required rate of return? Round your answer to one decimal place. _______ ´%
Olmsted Inc. has a beta of 1.38. The T-Bill rate is 3.87%, the rate of inflation is 3.93%, and the market risk premium is 9.03%. What is the expected return on Olmsted's stock? Group of answer choices 19.21 percent 13.43 percent 10.83 percent 16.33 percent 18.65 percent
Consider a three-factor APT model. The factors and associated risk premiums are: Factor Risk Premium (%) Change in gross national product (GNP) + 6.5 Change in energy prices 0.5 Change in long-term interest rates +2.9 Calculate expected rates of return on the following stocks. The risk - free interest rate is 6.8%. A stock whose return is uncorrelated with all three factors
What is the expected return of a portfolio with two stocks that has 450 shares of stock A, which has a price of $32.20 per share and an expected return of 10.36%, and $51,900.00 of stock B, which has a beta of 1.18? The market has an expected return of 14.70 %, the inflation rate is 1.60 %, and the risk-free rate is 2.10%. 15.53% (plus or minus 4 bps) 13.88% (plus or minus 4 bps) 17.46% (plus or minus 4 bps) 15.99% (plus or minus 4 bps) None of the above is within 4 bps of the correct answer
You own a stock that has an expected return of 16.00 percent and a beta of 1.33. The U.S. Treasury bill is yielding 3.65 percent and the inflation rate is 2.95 percent. What is the expected rate of return on the market? Group of answer choices 12.07 percent 12.94 percent 13.64 percent 14.09 percent 14.42 percent

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