The risk-free rate is 4% and the market risk premium is 5%. What is the required return on a portfolio of stocks A and B given the information below: Stock Weight Beta A 30% 0.6 B 70% 1.0 answer format: show your answer in percent (without the % sign) and to 1 decimal place. For example, 12.56 should be shown as 12.6

Q: Assume that the risk-free rate is 2.5% and the required return on the market is 8%. What is the…

A: According to capital assets pricing model, The expected return on equity stock is calculated as…

Q: a. A market-value-weighted index. b. An equally weighted index.

A: First let us determine the formula to solve the question. In a price weighted index, the index value…

Q: A stock has a required return of 8%, the risk-free,rate is 3.5%, and the market risk premium is 2%.…

A: Required return: 8%Risk free rate: 3.5%Market risk: 2%a. Beta=(Required return-Risk free rate) /…

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A: Solution: Given, Probability of Stock A (P) Return of Stock A(%) = RA E(RA) = RA*P [RA -…

Q: Assume rhat the risk-free rate is 5.5% and the market rate  premium is 6%. A) What is the required…

A: As per CAPM, Required rate of return = Risk free Rate + (beta * Market Risk premium)

Q: Assume that the risk-free rate is 6.00% and the market risk premium is 6.75%. What is the expected…

A: Given: Risk free rate=6% Market risk premium = 6.75%

Q: stock has a required return of 8%, the risk-free rate is 3.5%, and the market risk premium is 3%. a.…

A: CAPM is an abbreviation used for Capital asset pricing model. This model is used to determine the…

Q: A stock has a required return of 15%, the risk-free rate is 7.5%, and the market risk premium is 5%.…

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Q: Suppose that the index model for stocks A and B is estimated from excess returns with the following…

A: Standard deviation of stock = wherei is stock is beta of stock i is standard deviation of market

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Q: A stock has a beta of 1.61, the expected return on the market is 0.07, and the risk-free rate is…

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Q: Assume that the ridk-free rate is 4% and the required return on the market is 11%.What is the…

A: As per CAPM, Required Rate of return = Risk free rate + (Beta * Market risk premium) Market risk…

Q: Consider the three stocks in the following table. Pt represents price at time t, and Qt represents…

A: StockP0Q0P1Q1P2Q2A $    86.00100 $    91.00100 $  91.00100B $    46.00200 $    41.00200 $  41.00200C…

Q: invest 40% in A and 60% in B, what would be the return standard deviation of your portfolio? Enter…

A: First we need to find the standard deviation of individual stocks and their correlation co-efficient…

Q: risk-free rate is 6.5% and the required return on the market is 9%. What is the required rate of…

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Q: Consider the following information: State Probability Stock A Stock B Stock C Boom 0.32 0.25 0.14…

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Q: The expected return on stock A is 11.70 percent. The expected return on stock B is 9.40 percent.…

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Q: Percentages need to be entered in decimal format, for instance 3% would be entered as .03. That is…

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Q: answer each part correctly PLEASE.

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Q: Which one of the following stocks is correctly priced if the risk-free rate of return is 3.0 percent…

A: In this question, we are required to determine the stock which is correctly priced.

Q: Suppose that the index model for stocks A and B is estimated from excess returns with the following…

A: ParticularsStock AStock BBeta1.201.5R-square0.250.15σM16%

Q: The risk-free rate is 1.13% and the market risk premium is 6.26%. A stock with a β of 0.84 will have…

A: Given: Risk free rate = 1.13% market risk premium = 6.26% Beta = 0.84

Q: The stock market can have three potential returns with the following probabilities. Note "otherwise"…

A: Otherwise probability= 1- (0.24+0.38) = 0.38Expected return = (0.24*-0.04( + (0.38*0) + (0.38*0.18)=…

Q: 1. Consider the three stocks in the following table. P, represents price at time t, and Q,…

A: a) Market value weighted index is the index where the market value of the individual stocks are…

Q: The index model has been estimated from the excess returns for stock A with the following results:…

A: RA12.00%+1.55Rm+eAσM24.00%σ(eA)18.50%

Q: Calculate the expected rate of return, , for Stock B ( = 12.00%.) Do not round intermediate…

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Q: A stock has an expected return of 0.15, its beta is 0.52, and the expected return on the market is…

A: Expected return = 0.15 Beta = 0.52 Market return = 0.08

Q: a. Calculate the rate of return on a price-weighted index of the three stocks for the first period…

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Q: Calculate the expected rate of return for each stock. (2 decimal) places Stock A Expected Return %…

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Q: You ask a stockbroker what the firm's research department expects for these three stocks. The broker…

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A: 2Investors have different options for making investments, and the motive behind investments is to…