What is the beta of a stock with an expected retum of 109%, if Treasury bills yield 4% and the market retum (Le. R is 1096? 3.0 B) 20 10 D) 0.2

Q: Suppose that the PSE composite index will move from 3,500 to 4,266 and rate for T-bills is 5%.  The…

A: The market return of the stock can be calculated by the changes in index. and this market return…

Q: Suppose rRF = 9%, ľM = 14% and b; = 13 What is r;, the required rate of return on Stock i?

A: Given: Risk free return (rRF)=9%Market returnrM=14%Beta coefficient(bi)=13

Q: A stock has an expected return of 6%. What is its beta? Assume the risk-free rate is 8% and the…

A: Given details: Expected return = 6% Risk free rate = 8% Expected Market Return = 18% From the above…

Q: A stock has a beta of 1.78 The risk free rate is 1.314% and the market risk premium is 5% What is…

A: Fair return on stock :— It is the sum of risk free rate of return and beta multiplied with market…

Q: Beta for Stock Y given the Expected Return of Stock Y is 20.4% The expected return on the Market…

A: The given problem can be solved using Capital asset pricing model.

Q: Assume that the risk-free rate is 6.5% and the required return on the market is 10%. What is the…

A: Risk free rate (Rf) = 0.065 Market return (Rm) = 0.10 Beta (b) = 3 Required rate of return = ?…

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: Dhofar Energy Services has a Beta = 1.18 The risk-free rate on a treasury bill is currently 4.4% and…

A: As per Capital Asset Pricing Model(CAPM) Cost of equity = Risk Free Rate + (Market Return -Risk Free…

Q: FlavR Co stock has a beta or 2.04, the current risk-free rate is 2.04 percent, and the expected…

A: In the given question we are require to calculate the FlavR co's cost of equity: We can calculate…

Q: A share has a beta of 1.2. The risk-free rate of return is 2.0% and the market risk premium is…

A: Using CAPM

Q: A stock has an expected return of 10.45 percent, its beta is .85, and the expected return on the…

A: To calculate the risk-free rate using the Capital Asset Pricing Model (CAPM), we can use the…

Q: Do = $3.30, g (which is constant) = 3-5%, and Po= $52, then what is the stock's expected dividend…

A: Current dividend = d0 = $3.30 Growth rate = r = 3.5% Current price of stock = p0 = $52

Q: If D0 = $2.25, g (which is constant) = 3.6%, and P0 = $50.00, then what is the stock's expected…

A: Cost of equity capital is also known as KE. It is the cost which is incurred by the company for…

Q: Please help me with 11-5 ??‍♀️

A:

Q: The risk-free rate is 3.1 percent and the market expected return is 12.2 percent. What is the…

A: Risk free rate = rf = 3.1%Market return = mr = 12.2%Beta = b = 1.16

Q: What is the beta of a stock with an expected return of 106, if Treasury bills yield 4% and the…

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

Q: Dhofar Silicon Services has a B(Beta)= 1.4.The risk free rate on a treasury bill is currently 8.2%…

A: The Correct option is OPTION-C. This problem is related to Capital Asset Pricing Model (CAPM)…

Q: .Consider stock XYZ. If the current book value is 100, the current earnings per share is 10, the…

A: Given, Current Book Value = 100 Current Earnings per share = 10 Growth Rate =3% Discount Rate = 13%…

Q: The risk-free rate is 4%%. The market risk-premium is 79%. The beta is 20. What is the expected rate…

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

Q: Required Rates of Return Suppose that the risk-free rate is 5% and that the market risk premium is…

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

Q: The beta =

A: The beta of a stock is the degree of responsiveness to movements in price with changes in the stock…

Q: You are given the following information for DEF Company. What is the stock's beta? • Expected return…

A: ER = expected return ER = RF +;BETA ( RM - RF)  RF = RISK FREE RATE  RM = RETURN OF MARKET  RM - RF…

Q: f Company A has a beta of 0.70, while Company B's beta is 1.45. The required return on the stock…

A: Step 1: To find the difference between Company A's and Company B's required rates of return, we will…

Q: Suppose your expectations regarding the stock price are as follows: State of the Market Boom Normal…

A: The standard deviation quantifies the level of risk associated with a stock, while the mean…

Q: Assume that the CAPM holds, and refer to the graph below. What is the correlation between stocks B…

A: Here's a detailed explanation for better understanding. To find the correlation between stocks B and…

Q: Assume that the risk-free rate is 4% and the expected return on the market is 11.5%. What is the…

A: The Capital Asset Pricing Model (CAPM) is a tool used in finance to estimate the cost of equity,…

Q: Consider 3 stocks A, B, and C and the risk-free rate RF-0.5%. The logarithmic rates of return are as…

A: “Hi There, thanks for posting the question. But as per Q&A guidelines, we must answer the first…

Q: Stock A: Beta is 1.30, the require return in 12.00% Stock B: Beta 0.80. If the risk free is 4.75%.…

A: To solve the question, first we need to determine the market return and then use it to determine the…

Q: Assume that the risk-free rate is 6% and the required return on the market is 10%. What is the…

A: The formula used as follows: Required rate of return=rRF+Beta rM-rF

Q: Consider a stock that has a Beta of 0.85. You expect the long-term return on the market to be 9.75%…

A: CAPM is also known as capital asset pricing model. It helps in know the expected return on the…

Q: Dhofar Energy Services has a Beta = 1  The risk-free rate on a treasury bill is currently 4.4% and…

A: By Capital asset pricing model: Cost of equity = Rf + ß*(Rm - Rf) Rm = (Cost of equity - Rf)/ß + Rf

Q: Suppose S = $96, K = $100, u = 1.03, d = 0.97, and R = 1.02. The risk-neutral probability, q, that…

A: In this question, we are required to determine the risk-neutral probability.

Q: Find the Beta for Stock given the cost of equity is 14.2% The expected return on the market is 9.4%…

A: Through CAPM, we can find the beta of the stock. Formula for finding beta will be as below. Expected…

Q: D1 = $1.25, g = 6.00%, β = 1.15, market risk premium = 5.5%, and risk free rate = 4 %.  Find the…

A: Capital Asset Pricing Model(CAPM) is method used to compute minimum required rate that stock must…

Q: [Questions 15-16] The stock is expected to pay a dividend of $0.8 per share in year 1. Since then,…

A: beta = b = 1.5 Risk free rate = rf = 2% market risk premium = mrp = 6%

Q: 4. Assume that the risk-free rate is 5% and the expected return on the market is 12%. What is the…

A: In the given question we are required to calculate required rate of return of stock using given…

Q: Using CAPM to determine the expected rate of return for risky assets, consider the following example…

A: The Capital Asset Pricing Model (CAPM) is a widely used financial model that provides a framework…

Q: The risk-free rate is 496. The market risk-premium is 796. The beta is 20. What is the expected rate…

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

Q: m is invested 50% in m₁ and 50% in m₂, and the correlation coefficient between my and m₂ is 0.4.…

A: Portfolio beta is a measure of an investment portfolio's overall volatility or systematic risk…

Q: Suppose your expectations regarding the stock price are as follow HPR (including Probability Ending…

A: The degree of variance or departure from the mean is quantified by the standard deviation, which is…

Q: A stock has a required return of 11%, the risk-free rate is 7%, and the market risk premium is 4%.…

A: Required return = risk free rate + beta*market risk premium 11 = 4 + beta*7

Q: If the interest rate on T Bills is 2% and the market risk premium is 6%, what is the CAPM-implied…

A: interest rate on T-bills or risk free rate is 2% Market risk premium is 6% Beta is 1.25   To Find:…

Q: You have a portfolio which consists of 75% of stock 1 (o^2 = 0.16) and 25% of stock 2 (o^2 = 0.09).…

A: Return on the stock is based on the risk free rate, market return and the risk associated with the…

Q: Suppose your expectations regarding the stock price are as follows: State of the Market Boom Normal…

A: The mean of the returns refers to the average profits that the investment provides. It is used to…

Q: A stock has a beta of​ 1.3, and a market risk premium of​ 8%. The​ risk-free rate is​ 4%. What is…

A: The objective of this question is to calculate the expected return on a stock given its beta, the…

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.