What is beta of stock with premium of 12% if the market risk premium is 14%?

Q: Which one of the following stocks is correctly priced if the risk-free rate of return is 4.1 percent…

A: We will apply the CAPM model here. CAPM stands for Capital Asset Pricing Model.

Q: If share C has a beta of 1,3; the risk-free rate is 8% and market risk premium is 7%, what would the…

A: Step 1: Given Value for Calculation Beta = b = 1.3Risk Free rate = rf = 8%market Risk Premium = mrp…

Q: If the market risk premium is 8%, then according to the CAPM, the risk premium of stock with a beta…

A: In the given question we require to calculate the risk premium of stock and choose the best option.

Q: A stock's beta is 1.8 and the market risk premium is 6.6%.  If the risk-free rate is 3.1%, what is…

A: The risk premium refers to the extra return over the risk-free rate that the stock provides for its…

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: A stock has an expected return of 15.7 percent, the risk-free rate is 6.25 percent, and the market…

A: Given The expected return is 15.7 percent Risk free rate is 6.25% Market risk premium is 7.6%

Q: ASsume the following data for a stock: Beta 15, risk-free rate = 4 percent, market rate of return 12…

A:

Q: The expected return for a stock, calculated using the CAPM is 13.5%. The risk free rate is 7.5% and…

A: In the given problem we are required to calculate the implied return on market using following…

Q: Dylan purchases a retirement annuity that will pay him $1,500 at the end of every six months for the…

A: Present value is an estimate of the present value of future cash values ​​that may be received at a…

Q: Suppose the CAPM holds. The risk-free rate is 2%, and the expected return of the market portfolio is…

A: As per CAPME(ri) = Rf  + Bi * (E(Rm) - Rf)E(ri) = Expected returnRf = Risk free rateBi = BetaE(Rm) =…

Q: A stock has a beta of 1.9. The risk-free rate is 2%. Assume that the CAPM holds. What is the…

A: According to CAPM (Capital asset pricing model) ,k =Rf+[ b*(Rm-Rf)]wherek= expected return for the…

Q: Beta and required rate of return A stock has a required return of 11 percent; the risk-free rate is…

A: In the given question we require to compute the beta of stock from below details : Required return =…

Q: A stock has an expected return of 13.87 percent. The beta of the stock is 1.7 and the risk-free rate…

A: Expected Return = r = 13.87%Beta = b = 1.7Risk free rate = rf = 5%Market Risk Premium = mrp = ?

Q: A stock has an expected return of 7.8 percent. The expected return on the market is 9 percent and…

A: Beta less than 1 signifies less systematic risk.

Q: A stock has a beta of 1.38. The risk free rate is 0.817% and the market risk premium is 5%. What is…

A: Solution:- Capital Asset Pricing Model (CAPM) is the model which helps to compute the fair return on…

Q: A stock has a beta of 1.16, the expected return on the market is 11 percent, and the risk-free rate…

A: To calculate the expected return on this stock we will use the below formula   Expected return =…

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

A: The objective of the question is to calculate the risk premium using the Capital Asset Pricing Model…

Q: A stock's beta is 1.6 and the market risk premium is 7.7%.  If the risk-free rate is 3.5%, what is…

A: Capital Asset Pricing Model ( CAPM) is an alternative model to find out the required rate of return…

Q: A stock has an expected return of 10.99 percent, the risk-free rate is 2.46 percent, and the market…

A: Expected return = 10.99%Risk-free rate = 2.46%Market risk premium = 4.95%To find: Beta of the stock.…

Q: A stock has an expected return of 16 percent, its beta is 0.6, and the risk-free rate is 6.4…

A: Given the following information: Expected return on stock (r) = 16% Beta (b) = 0.6 Risk free rate…

Q: A stock has a beta of 1.68, the expected return on the market is 14.72, and the risk-free rate is…

A: As per CAPM formula Expected return on stock = Risk free return + Beta*(Market return-Risk free…

Q: Assume that the risk-free rate is 6.4% and the market return is 8%. Calculate the expected rate of…

A: Risk free rate = 6.4% Market return = 8% Beta = 3   (Assumed % sign is a clerical error)

Q: Stock A has an expected return of 13.52 percent. Stock B has an expected return of 9.24 percent.…

A: The concept in question is based on the Capital Asset Pricing Model (CAPM), a finance theory used to…

Q: A stock's beta is 1.5 and the market risk premium is 5.6%.  If the risk-free rate is 2.9%, what is…

A: The CAPM model refers to the relation between the systematic risk and the return of the stock. It is…

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.