Suppose you observe the following situation: Security Pete Corp. Expected Return .190 Beta 1.80 Repete Co. 1.49 .163 a. Assume these securities are correctly priced. Based on the CAPM, what is the expected return on the market? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the risk-free rate? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Expected return on market b. Risk-free rate A stock has an expected return of 12.2 percent, the risk-free rate is 6 percent, and the market risk premium is 10 percent. What must the beta of this stock be? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Beta of stock
Suppose you observe the following situation: Security Pete Corp. Expected Return .190 Beta 1.80 Repete Co. 1.49 .163 a. Assume these securities are correctly priced. Based on the CAPM, what is the expected return on the market? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the risk-free rate? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Expected return on market b. Risk-free rate A stock has an expected return of 12.2 percent, the risk-free rate is 6 percent, and the market risk premium is 10 percent. What must the beta of this stock be? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Beta of stock
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Transcribed Image Text:Suppose you observe the following situation:
Security
Pete Corp.
Expected Return
.190
Beta
1.80
Repete Co.
1.49
.163
a. Assume these securities are correctly priced. Based on the CAPM, what is the
expected return on the market? (Do not round intermediate calculations and enter
your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
b. What is the risk-free rate? (Do not round intermediate calculations and enter your
answer as a percent rounded to 2 decimal places, e.g., 32.16.)
a. Expected return on market
b.
Risk-free rate
Transcribed Image Text:A stock has an expected return of 12.2 percent, the risk-free rate is 6 percent, and the
market risk premium is 10 percent. What must the beta of this stock be? (Do not round
intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Beta of stock
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