Provide correct answer this financial accounting question If the risk-free rate of return is 3 percent and the market risk premium is 6 percent,what is the expected return on a stock with a beta of 1.8?A. 8.40%.B. 10.80%.C. 13.80%.D. 19.20%.

To calculate the expected return on the stock using the Capital Asset Pricing Model (CAPM), the…

Answered: If the risk-free rate of return is 3…

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter6: Risk And Return

Section: Chapter Questions

Problem 14P

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Similar questions

You have observed the following returns over time: Assume that the risk-free rate is 6% and the market risk premium is 5%. a. What are the betas of Stocks X and Y? b. What are the required rates of return on Stocks X and Y? c. What is the required rate of return on a portfolio consisting of 80% of Stock X and 20% of Stock Y?
Suppose that the risk-free rate is 5% and that the market risk premium is 7%. What is the required return on (1) the market, (2) a stock with a beta of 1.0, and (3) a stock with a beta of 1.7?
AA Corporations stock has a beta of 0.8. The risk-free rate is 4%, and the expected return on the market is 12%. What is the required rate of return on AAs stock?
The standard deviation of stock returns for Stock A is 40%. The standard deviation of the market return is 20%. If the correlation between Stock A and the market is 0.70, then what is Stock A’s beta?
Assume that Temp Force has a beta coefficient of 1.2, that the risk-free rate (the yield on T-bonds) is 7.0%, and that the market risk premium is 5%. What is the required rate of return on the firms stock?
The risk-free rate of return is 4 percent and the market risk premium is 8 percent. What is the expected rate of return on a stock with a beta of 1.28? a. 9.12 percent b. 10.24 percent c. 13.12 percent d. 14.24 percent e. 5.36 percent
The risk-free rate of return is 3.9 percent and the market risk premium is 6.2 percent. What is the expected rate of return on a stock with a beta of 1.21? a. 11.4%b. 13.6%c. 15.4%d. 17%
The risk-free rate of return is 3.7 percent and the market risk premium is 6.2 percent. What is the expected rate of return on a stock with a beta of 1.21 O a. 10.92 percent O b. 11.40 percent O c. 11.20 percent O d. 12.47 percent
What is the beta of a stock where the expected rate of return is 14%, the market premium is 7%, and the risk free rate is 3%? a. 1.90 b. 0.95 C. 1.45 d. 1.57
For an investment in a stock, the probability of the return being -10.0% is 0.3, 10.0% is 0.4, and 30.0% is 0.3. Given the probability distributions, what is the expected rate of return for the investment?Choices:A. 10.00%B. 9.50%C. 15.00%D. 12.50%E. 13.00%
Find the required rate of return on the market if: beta is 1.23, required return on the stock is 9.50%, and risk-free rate is 2.30% A. 9.87% B. 8.40% C. 8.15% D. 8.72% E. 8.32%
suppose a risk free rate is 6% and the market premium is 7%. D1 is 1.25 per share and stock beta is 1.15. What is the required return?

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If the risk-free rate of return is 3 percent and the market risk premium is 6 percent, what is the expected return on a stock with a beta of 1.8? A. 8.40%. B. 10.80%. C. 13.80%. D. 19.20%.