What is the beta of a firm whose equity has an expected return of 21.3 percent when the risk - free rate of return is 7.0 percent and the expected return on the market is 18.0 percent? Select one: a. 1.30

Q: Suppose the risk-free return is 4% and the market portfolio has an expected return of 10% and a…

A: Calculation of 3M's beta with respect to market: Beta of 3M is determined by multiplying the…

Q: The company’s stock has a beta-coefficient of 1.5, and its market rate is 15%. With a risk-free rate…

A: Beta Coefficient is 1.5 Market rate is 15% Risk free rate is 8% Market rate increased by 1% To Find:…

Q: According to CAPM estimates, what is the cost of equity for a firm with a beta of 1.5 when the…

A: In the given question we are require to calculate the cost of equity for the firm using CAPM.

Q: If the risk free rate is 2 %, the expected return on the market portfolio is 12% and the beta of…

A: Financial statements are statements which states the business activities performed by the company .…

Q: What is the beta of a firm whose equity has an expected return of 21.3 percent when the risk-free…

A: Using CAPM

Q: Fiske Roofing Supplies' stock has a beta of 1.23, its required return is 12.00%, and the risk-free…

A: according to CAPM formula: rs=rf+beta×rm-rf where, rs=required rate of return of stockrf=risk free…

Q: What is the beta of a firm whose equity has an expected return of 21.3 percent when the risk - free…

A: Capital Pricing Model (CAPM) is an investment theory that shows the relationship between the…

Q: The risk free rate currently have a return of 2.5% and the market risk premium is 4.22%. If a firm…

A: Cost of equity refers to the net cost that a business entity bears by raising the capital from the…

Q: You have estimated a firm's beta value to be 1.2. The expected return of the market portfolio is 12%…

A: We require to calculate the required rate of return for the firm in this question. We can solve this…

Q: Suppose your company has an equity beta of 0,9 and the current risk-free rate is 7,1%. if the…

A: We require to calculate cost of equity capital in this question.

Q: Suppose the risk-free return is 4.2% and the market portfolio has an expected return of 11.4% and a…

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

Q: Suppose the risk-free return is 7.9% and the market portfolio has an expected return of 11.5% and a…

A: Risk free rate = 7.9% Stock beta = 0.77 Market return = 11.5%

Q: Paycheck, Inc. has a beta of 1.19. If the market return is expected to be 13.50 percent and the…

A: Risk Premium:  It is the investment return amount assets are expected to yield in excess of the…

Q: A portfolio has a beta of 1.2 and an actual return of 14.1 percent. The risk-free rate is 3.5…

A: Given: Beta = 1.2 Actual return = 14.1% Risk free rate = 3.5% Market risk premium = 7.4%

Q: Suppose the current risk-free rate of return is 3.5 percent and the expected market return is 9…

A: In the given question we are required to compute the firm's cost of retained earnings using CAPM…

Q: The common stock of Up-Towne Movers is selling for $33 a share and has a beta of 1.25. If the CAPM…

A: Given information in the question Current price              = $33 Beta…

Q: If the risk free rate is 2 %, the expected return on the market portfolio is 12% and the beta of…

A: Financial management consists of directing, planning, organizing and controlling of financial…

Q: A stock has a beta of 1.2 and an expected return of 11.8 percent. A risk-free asset currently earns…

A: Portfolio refers to basket of different financial assets in which investment is made by single…

Q: A stock has an expected return of 13.1 percent, a beta of 1.28, and the expected return on the…

A: Given details are : Expected return on stock = 13.1% Beta = 1.28 Expected market return (Rm) = 11%…

Q: The stock of Martin Industries has a beta of 1.43. The risk-free rate of return is 2.6 percent and…

A: A model that represents the relationship of the required return and beta of a particular asset is…

Q: The risk-free rate of return is 2.5%, the required rate of return on the market is 11.5%, and ABC…

A: The Capital Asset Pricing Model (CAPM) is the model which shows the relationship between the…

Q: Adam wants to determine the required return on a stock portfolio with a beta coefficient of 0.5.…

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

Q: Consider the CAPM. The expected return on the market is 18%. The expected return on a stock with a…

A: We are given following details : Expected return on market = 18% Beta = 1.2 Expected return on stock…

Q: What is the beta of a firm whose equity has an expected return of 21.3 percent when the risk-free…

A: Beta = ( Expected retrun -risk free rate)  / (market return - risk free rate )

Q: a) Firm A has systematic risk beta and ROE (return on equity) equal 0.8 and 7% respectively. The…

A: Price earning ratio or multiple is the ratio of the market price and earning per share. It indicates…

Q: What is the expected return on Verdoni’s stock?

A: The expected return is the return expected by the investors on their investment. It is the…

Q: The expected rate of return on a market portfolio is 7 percent. The riskless rate of interest is 4…

A: required rate of return = risk free rate + beta * (market return less risk free rate)

Q: The common stock of Peeta Inc. has an expected return of 15.0%, the risk-free rate is 3.20%, and the…

A: The return which a company decides as a cost if an investment meets its capital requirement is…

Q: The stock of Big Joe's has a beta of 1.50 and an expected return of 12.60 percent. The risk-free…

A: Given: Beta = 1.50 Expected return = 12.60% Risk free rate = 5.1%

Q: If the expected return from the market is 18%, the risk-free rate is 11%, and the beta of Loschert…

A: The term beta of a stock represents the responsiveness of a particular stock in relation to the…

Q: ZR Corporation’s stock has a beta coefficient equal to 1.8 and a required rate of return equal to 16…

A: Beta =1.8 Required return =16% Market return =10%

Q: Consider the CAPM. The risk-free rate is 6%, and the expected return on the market is 18%. What is…

A: In the given question we need to calculate the expected return on a stock using CAPM i.e. Capital…

Q: Suppose the current risk-free rate of return is 3.5 percent and the expected market return is 9…

A: Introduction: Retained earnings are the revenues or profits that an organization has produced to…

Q: UPS, a delivery services company, has a beta of 1.6, and Wal-Mart has a beta of 0.9. The risk-free…

A: The beta for entire portfolio is calculated below:

Q: y where the risk-free interest rate is 19% and the expected return of the market is 25%, the beta…

A: A. The expected returns can be calculated as follows : Calculations for above :

Q: Find the Risk-Free Rate given the Expected Return on Stock Y is 20 %, the Expected Return on Market…

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

Q: FlavR Company stock has a beta of 2.14, the current risk-free rate is 2.14 percent, and the expected…

A: Beta = 2.14 Risk free rate = 2.14% Market return = 9.14%

Q: What is the expected return on a stock with a beta of .8, given a risk-free rate of 3.5% and an…

A: In this question we need to compute the expected return on stock. This question can be solved using…

Q: JaiLai Cos. stock has a beta of 0.8, the current risk-free rate is 6.6 percent, and the expected…

A: Formula Cost of equity = Risk free rate+[Beta*(Market return-Risk free rate)] Where Risk free rate =…

Q: Suppose that there are two independent economic factors, F1 and F2. The risk-free rate is 10%, and…

A: Beta: It is defined as a computation of the risk or volatility of a portfolio or security.

Q: Ice Company stock has a beta of 1.92, the current risk-free rate is 5.17 percent, and the expected…

A: Beta = 1.92 Risk free rate = 5.17% Market return = 15.17%

Q: Using CAPM A stock has beta of 1.04, the expected return on the market is 10 percent, and the…

A: The expected return is the minimum required rate of return which an investor required from the…

Q: A stock has a beta of 1.32 and an expected return of 12.8 percent. The risk-free rate is 3.6…

A: The slope of SML is Return of Market minus Rf. Note: Rf= Risk-free Rate SML= Security Market Line

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.