You are given information on two stocks. Stock AXE has a required return of 12.25% and analysts expected the stock to provide a return of 13%. The beta of AXE stock is 1.15. Stock NIP has a beta of 1.6 and analysts expected the returns of Stock NIP to be 14%. The risk-free rate is 5%. What is the market risk premium? What is the required return

Q: A stock has an expected return of 14.3 percent, the risk-free rate is 3.9 percent, and the market…

A: Given: Expected return = 14.3% Risk free rate = 3.9% Market risk premium = 7.8%

Q: A stock has a beta of 0.8. Assume that the risk-free rate is 5.5% andthat the market risk premium is…

A: Given that;Risk free rate is 5.5%Beta is 0.8Market risk premium is 6%

Q: A stock has a beta of 1.09, the expected return on the market is 10.3 percent, and the risk-free…

A: Given Beta is 1.09 Expected return on market is 10.3% Risk free rate is 4.8%

Q: Stock R has a beta of 1.5, Stock S has a beta of 0.95, the required return on an average stock is…

A: Required rate of return is defined as the minimum return regarding an investor, which is used to…

Q: Stock R has a beta of 2.0, Stock S has a beta of 0.45, the requiredreturn on an average stock is…

A: Calculation of difference between riskier stock and less risky stock: Answer: The difference between…

Q: Y has a beta of 1.50 and an expected return of 17 percent. Stock Z has a beta of 0.80 and an…

A: CAPM gives the required rate of return based beta of the stock and risk free rate and market average…

Q: The risk-free rate is 5.6%, the market risk premium is 8.5%, and the stock's beta is 2.27. What is…

A: Following details are given in the question: Risk free rate = 5.6% Market Risk premium = 8.5%…

Q: Stock Y has a beta of 1.30 and an expected return of 13.0%. Stock Z has a beta of .75 and an…

A: We will calculate the expected return using the Capital Asset Pricing Method and then compare with…

Q: Stock Y has a beta of 1.50 and an expected return of 14.2 percent. Stock Z has a beta of .85 and an…

A: CAPM is the capital asset pricing model and is used to find the required return using the following…

Q: Based on the CAPM model, what should be the expected return for a stock with a beta of 2.1 when the…

A: The Capital Asset Pricing Model (CAPM) is used to calculate the expected return of a stock based on…

Q: Barry wishes to compute the beta of a stock that has a correlation of 0.64 with the market. The…

A: As per our guidelines, we are supposed to answer only 3 sub-parts (if there are multiple sub-parts…

Q: Target Corporation stock has a beta of 1.25, and Walmart stock has a beta of 0.5. If the expected…

A: The expected return for each stock is calculated using following CAPM(Capital asset pricing model)…

Q: A stock has an expected return of 13.1 percent, its beta is 1.70 and the risk free premium rate is…

A: Risk market return is used in CAPM model to calculate expected return on the stock and it is also…

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: The risk-free rate is 3.7 percent and the expected return on the market is 12.3 percent. Stock A has…

A: If expected return is more than required return then security is undervalued.If required return is…

Q: Consider the following table, which gives a security analyst's expected return on two stocks in two…

A: Given:Market rateAggressive stock Defensive stock 7%-4%4%23%37%11%Risk-free rate4%

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: A financial analyst has estimated the expected rates of return, coefficient of variations, and…

A: A stock is a financial market security that gives the holder an ownership interest in the company,…

Q: You are examining three different shares. Share A has expected return 6.20%, beta 0.47, and…

A: CAPM or Capital Asset pricing model is used to calculate the required rate of return to determine…

Q: a. What is the market risk premium? Show your work. b. What is the cost of equity for XYZ? Show your…

A: Please note that only 1 question can be solved under the Answering Guidelines. The solution to stock…

Q: Stock J has a beta of 1.37 and an expected return of 14.01%. Stock K has a beta of .92 and an…

A: Beta of portfolio.Bp = (Bj * Wj)+(Bk*Wk)whereBp = beta of portfolioBj = beta of stock JBk = beta of…

Q: A stock has an expected return of 13.4 percent, its beta is 1.60, and the risk-free rate is 5.5…

A: We require to compute the expected market return (Rm) from following details : Expected return on…

Q: You are examining three different shares. Share A has expected return 5.20 %, beta 0.47, and…

A: Capital Asset pricing Model helps in determining the fair return of the investment. It determines…

Q: Suppose Intel stock has a beta of 0.88, whereas Boeing stock has a beta of 1.18. If the risk-free…

A: CAPM stands for capital asset pricing model. This model describes the relationship between expected…

Q: You are using the CAPM to calculate a fair return for Stardust Inc. common stock. The market has a…

A: Beta is the measure of the systematic risk of a stock. It measures the volatility of the stock with…

Q: Stock X has a beta of 2.5 and an expected return of 22.5%. Stock Y has a beta of 1.5 and an expected…

A: Stock XStock YExpected return22.5%15.0%Beta2.51.5Market risk premium7.2%

Q: A stock has a beta of .85, the expected return on the market is 11 percent, and the risk-free rate…

A: Expected rate of return is the rate of return that the investor expects on their investment…

Q: Stock A has a beta of 1.2, stock B has a beta of 0.6, the expected rate of return on an average…

A: beta of stock A = ba = 1.2 beat of stock B = bb = 0.6 Market rate of return = rm = 12% Risk free…

Q: A stock has a beta of 1.2. The risk-free rate is 4%. Assume that the CAPM holds. A.  What is the…

A: Beta = 1.2Risk-free rate = 4%Capital Asset Pricing Model holds.

Q: Company A has a beta of 0.9 , while Company B's beta is 1.4 . The market risk premium is 13.78 %,…

A: The Capital Asset Pricing Model (CAPM) illustrates the relationship between systematic risk, or the…

Q: Stock Y has a beta of 1.35 and an expected return of 14.30 percent. Stock Z has a beta of 0.75 and…

A: Formula: Expected return = Risk free rate + (Beta*Market risk premium)

Q: Stock R has a beta of 1.4, Stock S has a beta of 0.95, the expected rate of return on an average…

A: The required return of the stock is calculated using the Capital asset pricing model(CAPM ).    The…

Q: A stock has an expected return of 14.3 percent, the risk-free rate is 3.2 percent, and the market…

A: Formula Expected return = Risk free rate+(Beta*Market risk premium) Where Expected return = 14.3%…

Q: By how much does the required return on the riskier stock exceed the required return on the less…

A: Required return: It is the minimum rate of return an investor will seek for investing in a company.…

Q: Stock R has a beta of 2.0, Stock S has a beta of 0.75, the required return on an average stock is…

A: Given, The Beta of Stock R is 2 The beta of stock S is 0.75 Average stock return is 14% Risk free…

Q: A stock has an expected return of 13.4 percent and a beta of 1.15, and the expected return on the…

A: The Capital Asset Pricing Model (CAPM) is a financial model that establishes a relationship between…

Q: An analyst has modeled the stock of a company using the Fama-French three-factor model. The market…

A: Market return is 12% return on the SMB portfolio (rSMB) is 2.1%  return on the HML portfolio (rHML)…

Q: A stock has an expected return of 18.0 percent, a beta of 1.90, and the return on the market is…

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

Q: Stock R has a beta of 1.5, Stock S has a beta of 0.85, the required return on an average stock is…

A: The objective of the question is to find out the difference in the required returns of two stocks…

Q: A stock has a beta of 1.15, the expected return on the market is 11% and risk free rate is 3%. What…

A: According to Capital asset pricing model ( CAPM),Re = Rf +[ beta × ( Rm - Rf)]Where,Re = expected…

Q: Your client is considering purchasing stocks.  The actual return of one o his choices follows here.…

A: Standard Deviation: It represents a measure of the dispersion of the data set that is in relation…

Q: A stock has an expected return of 9.9 percent, the risk-free rate is 1.8 percent, and the market…

A: Expected return = 9.9% Risk free rate = 1.8% Market risk premium = 4.3%

Q: A stock has an expected return of 15.2 percent, the risk-free rate is 3.4 percent, and the market…

A: As per CAPM model, expected return = risk free rate + beta*market risk premium