The stock in Bowie Enterprises has a beta of 1.21. The expected retum on the market is ft 50 percent and required return on the company's stock? Multiple Choice O 15.08% 13.30% 12.93% 16.96% rate is 2.94 percent. What is the

Q: What is Diddy's cost of equity2 (Round your answer to 2 declmal places.) Cost of equity

A: Cost of Equity Means the Return the Investors Expect from the company for the Investment in the…

Q: Required Rate of Return AA Corporation's stock has a beta of 0.6. The risk-free rate is 3%, and…

A: To calculate the required return we will use the below formula   Required rate of return = Risk free…

Q: Crane Industries, common stock has a beta of 1.5. If the current risk-free rate is 3.6 percent and…

A: The cost of common stock is the cost of issuing the equity capital of the company. The cost of…

Q: Fiske Roofing Supplies' stock has a beta of 1.23, its required return is 8.25%, and the risk-free…

A: Here, The question demands required rate of return of market not of stock therefore to calculate the…

Q: Suppose that the S&P 500 is expected to return 11 percent in the next year and T-bills are yielding…

A: In the given case, we have provided the S&P 500, T-bill and the beta.Where,S&P 500 =…

Q: AA Corporation's stock has a beta of 2.1. The risk-free rate is 6% and the expected return on the…

A: We need to calculate CAPM equation to calculate required rate return.Required rate of return = Risk…

Q: A share of stock with a beta of 0.8 currently sells for $50. Investors expect the stock to pay a…

A: Expected Return = Risk free rate + Market risk premium * Beta

Q: You own $13,020 of Denny's Corporation stock that has a beta of 3.06. You also own $27,125 of Qwest…

A: Question 1 Market Risk Premium  The market risk premium is the rate of return on a risky investment.…

Q: AA Corporation's stock has a beta of 0.8. The risk-free rate is 2%, and the expected return on the…

A: The required rate of return measure of the profitability of an investment and is used to evaluate…

Q: The stock in Bowie Enterprises has a beta of 1.10. The expected return on the market is 12.40…

A: Beta of stock = 1.10 Market return = 12.40% Risk free rate = 3.21%

Q: The risk-free rate of return is 4%, the required rate of return on the market is 12%, and High-Flyer…

A: To calculate the price at which a share should sell using the dividend discount model (DDM), we need…

Q: d. If you were equally likely to earn a return of 22 %, 10 % , 19 %, 3%, or 1% in each year (these…

A: Returns refer to the income earned by the investor for a specific period, it takes into account the…

Q: What is the company’s cost of common stock, rs?

A: Given information is: The common stock of Anthony Steel has a beta of 0.80.  The risk-free rate is 5…

Q: An analyst at PJ Dealers estimates that the CAPM beta for ZLX stock is 1.9. Given this information…

A: Given: Risk free rate = 2% Market rate = 12% Beta = 1.9

Q: FlavR Co stock has a beta of 2.03, the current risk-free rate is 2.03 percent, and the expected…

A: We are require to calculate the FlavR co's cost of equity in this question : We can calculate the…

Q: TJ Co stock has a beta of 1.64, the current risk-free rate is 5.94 percent, and the expected return…

A: In the given question we are require to calculate the TJ co cost of equity from following details:…

Q: JaiLai Cos. stock has a beta of 0.8, the curret risk-free rate is 5.8 percent, and the expected…

A: Beta = 0.8 Risk free rate (Rf) = 5.8% Market return (Rm) = 14%

Q: What is the required rate of return on AA's stock?

A: Required Rate of Return: It is the minimum rate acceptable by the investor for owning the stock of…

Q: The DR Company’s common stock has a beta of 1.07. What is the company’s cost of equity capital if…

A: As per  Capital asset pricing model Cost of equity capital = Risk free + Beta×[Return of market -…

Q: You own $17,765 of Opsware, Inc. stock that has a beta of 3.73. You also own $24,310 of Lowe's…

A: A combination of the different types of funds and securities for the investment is term as the…

Q: A stock is currently selling for $92.45 and is expected to sell for $109.07 in 1 year.  If the…

A: The overall return on an asset or investment portfolio over the time it has been kept is known as…

Q: What is the expected rate of return for this non-constant growth stock? You have evaluated this…

A: A rate of return is the net profit or loss on an investment over a given period of time represented…

Q: Fiske Roofing Supplies' stock has a beta of 1.23, its required return is 9.50%, and the risk-free…

A: Stock beta is 1.23 Required return is 9.50% risk free rate is 4.30%   To Find: Required rate of…

Q: The common stock of Flavorful Teas has an expected return of 17.96 percent. The return on the market…

A: expected return =risk free rate + beta * (market return - risk free rate)

Q: Thecovarianceofthemarket'sreturnwithaStockA'sreturnis0.003andthestandarddeviation of the market's…

A:

Q: risk

A: Required return = Risk free rate + Market risk premium * Beta

Q: Zacher Co.'s stock has a beta of 1.40, the risk-free rate is 4.25%, and the market risk premium is…

A: The objective of the question is to calculate the required rate of return for Zacher Co.'s stock…

Q: The common stock of Anthony Steel has a beta of 0.80.  The risk-free rate is 5 percent and the…

A: Cost of equity : As per capital asset pricing Cost of equity is calculated by the use of risk free…

Q: Zacher Co.'s stock has a beta of 1.50, the risk-free rate is 4.25%, and the market risk premium is…

A: Given data; beta of stock = 1.50 risk free rate = 4.25% market risk premium = 5.50%

Q: A share of stock with a beta of 0.8 currently sells for $50. Investors expect the stock to pay a…

A: Expected Return = Risk free rate + Market risk premium * BetaExpected Return = 1% + 6% * 0.8…

Q: Fiske Roofing Supplies' stock has a beta of 1.23, its required return is 10.00%, and the risk-free…

A: Market risk premium is calculated using following equation Market risk premium = Required return on…

Q: Lordstown Motors common stock has an E(R) = 13.92%. What is Lordstown’s beta if Rm = 12% and the…

A: The capital asset pricing model is the model which shows the relationship between the systematic…

Risk and return

Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary. 

Capital Asset Pricing Model

Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.