Stock A has a beta of 1.2, stock B has a beta of 0.6, the expected rate of return on an average stock is 12 per cent and the risk-free rate of return is 7 per cent. By how much does the required rate return on the riskier stock exceed the required return on the less risky stock

Q: A stock has a beta of 0.8. Assume that the risk-free rate is 5.5% andthat the market risk premium is…

A: Given that;Risk free rate is 5.5%Beta is 0.8Market risk premium is 6%

Q: 2) Stock Y has a beta of 1.28 and an expected return of 13.7 percent. Stock Z has a beta of 1.02 and…

A: In this question  we are given expected returns and beta of two stocks i.e. Stock Y and Stock Z and…

Q: Stock R has a beta of 2.0, Stock S has a beta of 0.45, the requiredreturn on an average stock is…

A: Calculation of difference between riskier stock and less risky stock: Answer: The difference between…

Q: The risk-free rate is 5.6%, the market risk premium is 8.5%, and the stock's beta is 2.27. What is…

A: Following details are given in the question: Risk free rate = 5.6% Market Risk premium = 8.5%…

Q: Suppose the market risk premium is 9 % and also that the standard deviation of returns on the market…

A: Expected rate of return is the minimum return that a shareholder requires on the investment made in…

Q: Company A has a beta of 0.9 , while Company B's beta is 1.4 . The market risk premium is 13.78 %,…

A: The Capital Asset Pricing Model (CAPM) illustrates the relationship between systematic risk, or the…

Q: Stock A has a beta coefficient = 1.12. calculate the expected rate of return of the stock A given…

A: Solution:- Capital Asset Pricing Model (CAPM) is the model to calculate expected return on a stock.…

Q: (d) Suppose the risk-free rate is 4%, the market risk premium is 15% and the betas for stocks X and…

A: Expected rate of return for Stock X and Y are calculated using the below formula We can calculate…

Q: By how much does the required return on the riskier stock exceed the required return on the less…

A: Required return: It is the minimum rate of return an investor will seek for investing in a company.…

Q: How do you find the market risk premium and market expected return given the expected return of…

A: The rate of return earned by the investor over the risk-free rate of return is considered as market…

Q: The risk-free rate is 5.6%, the market risk premium is 8.5%, and the stock’s beta is 2.27.  What is…

A: The risk-free rate is 5.6%, beta is 2.27 and market risk premium is 8.5%. Capital Asset Pricing…

Q: *Stock A has a beta of 1.3 and an expected return of 10.2. Stock B has a beta of 0.8 and an expected…

A: Given, Stock A has beta of 1.3 and Expected return of 10.2 Stock B has beta of 0.8 and expected…

Q: Give typing answer with explanation and conclusion  the expected return on stock A is 11.35%. the…

A: CAPM stands for capital asset pricing model. It is a very important theoretical concept in finance.

Q: You are trying to figure out the risk-free rate estimate.  Here is information about a stock's CAPM…

A: As per the CAPM model return can be calculated as under. Stock Return = Risk free Return + (Return…

Q: E(FAssume that using the Security Market Line (SML) the required rate of return (RA) on stock A is…

A: There are various models which shows the relation of return (benefit) and risk. SML is one of them,…

Q: Stock R has a beta of 1.5, Stock S has a beta of 0.75, the expected rate ofreturn on an average…

A: The riskiness of security is measured by "Beta". Beta measures the volatility of the stock with…

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: Assume that the risk-free rate is 2.8 percent, and that the market risk premium is 4.8 percent. If a…

A: Required rate of return = 16.1%Risk-free rate = 2.8%Market risk premium = 4.8%

Q: A stock has a required return of 11%, the risk- free is 7%, and the market risk premium is 4%. a.…

A: In this problem we require to calculate the beta of the stock and the revised required rate of…

Q: Stock Y has a beta of 1.2 and an expected return of 11.1 percent. Stock Z has a beta of .8 and an…

A: Reward-to-risk ratio refers to the calculation that is used for measuring the gain that is expected…

Q: Stock X has a beta of 1.15 and an expected return of 11.1 percent. Stock Y has a beta of 1.2 and an…

A: Required Rate of Return is the percentage of minimum acceptable rate of return accepted by an…

Q: You're analyzing a stock that has a beta of 1.65. If the risk free rate of return is .04 and market…

A: Beta =1.65 Risk free rate = 0.04 Market risk premium =0.15

Q: Assume that the risk-free rate is 3.5% andthe market risk premium is 4%. What is the required return…

A: Given: Risk-free rate (rRF) = 3.5% Market risk premium (rM – rRF) = 4% Stock beta (bS) = 0.8

Q: Stock A's stock has a beta of 1.30, and its required return is 15.75%. Stock B's beta is 0.80. If…

A: Given information: Stock A beta is 1.30 Required return is 15.75% Stock B beta is 0.80 Risk free…

Q: A stock has a beta of 1.04, the expected return on the market is 11.75, and the risk-free rate is…

A: A stock is a financial security issued by companies to raise equity funds from the primary market.…

Q: Stock R has a beta of 1.8, Stock S has a beta of 0.55, the expected rate of return on an average…

A: Beta of stock R = 1.8 Beta of stock S = 0.55 Market return = 9% Risk free rate = 3%

Q: 1) The risk-free rate is 3.7 percent and the expected return on the market is 12.3 percent. Stock A…

A: If the required return (computed using CAPM) is less than the expected return for stock A, the stock…

Q: a. A stock has a beta of 1.2, the expected return on the market is 17 percent, and the risk-free…

A: Following details are given to us: Beta = 1.2 Expected return on Market = 17% Risk free rate= 8% We…