Stock A has an expected return of 15%, and a standard deviation of 1%. Stock B has an expected return of 20% and a standard deviation of 2%. The correlation coefficient between these two stocks is 1. What shoul be the risk free interest rate in this market to prevent arbitrage opportunity? O 10% O 1% O 5% 8.5% 7.5% Question 8 Oakdale Furniture Inc. has a beta coefficient of 0.7 and a required rate of return of 15 percent. The market risk premium is currently 5 percent. If the inflation premium increases by 2 percentage points, and Oakdale acquires new assets that increase its beta by 50 percent, what will be Oakdale's new required rate of return (assume that the inflation premium affects both the market return and the risk free rate the same way)? 22.80%
Stock A has an expected return of 15%, and a standard deviation of 1%. Stock B has an expected return of 20% and a standard deviation of 2%. The correlation coefficient between these two stocks is 1. What shoul be the risk free interest rate in this market to prevent arbitrage opportunity? O 10% O 1% O 5% 8.5% 7.5% Question 8 Oakdale Furniture Inc. has a beta coefficient of 0.7 and a required rate of return of 15 percent. The market risk premium is currently 5 percent. If the inflation premium increases by 2 percentage points, and Oakdale acquires new assets that increase its beta by 50 percent, what will be Oakdale's new required rate of return (assume that the inflation premium affects both the market return and the risk free rate the same way)? 22.80%
Chapter8: Analysis Of Risk And Return
Section: Chapter Questions
Problem 14P
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plz solve both parts within 30-40 mins I'll give you multiple upvote
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