Question

In: Finance

The risk-free rate is 2% and the market risk premium is 5%. What is the required...

The risk-free rate is 2% and the market risk premium is 5%. What is the required return on a portfolio of stocks A and B given the information below:

Stock

Weight

Beta

A

30%

1.0

B

70%

0.5

Solutions

Expert Solution


Related Solutions

a). What is the market risk premium if the risk free rate is 5% and the...
a). What is the market risk premium if the risk free rate is 5% and the expected market return is given as follows? State of nature Probability Return Boom 20% 30% Average 70% 15% Recession 10% 5% b). A firm is evaluating two projects that are mutually exclusive with initial investments and cash flows as follows: Project A Project B Initial Investment End-of-Year Cash Flows Initial Investment End-of-Year Cash Flows RM40,000 RM 20,000 RM 90,000 RM 40,000 RM 20,000 RM...
1. The risk free rate is 2%, the risk premium for the market is 5%, and...
1. The risk free rate is 2%, the risk premium for the market is 5%, and a stock has an expected return of 10.5%. What is the firm’s beta? 2. A firm has a beta of 1.3 and the risk premium for the market is 6%. If the firms expected return is 11%, what is the risk free rate? 3. A firm with a beta of 1.5 has a market return of 15% when the risk free rate is 3%...
If the market risk premium is 2%, the risk-free rate is 4.4% and the beta of...
If the market risk premium is 2%, the risk-free rate is 4.4% and the beta of a stock is 1.2, what is the expected return of the stock?
​​​​​ A stock's beta is 5, the market risk premium is 6%, and the risk-free rate...
​​​​​ A stock's beta is 5, the market risk premium is 6%, and the risk-free rate is 2%. According to the CAPM, what discount rate should you use when valuing the stock? A stock's beta is 1.5, the expected market return is 6%, and the risk-free rate is 2%. According to the CAPM, what discount rate should you use when valuing the stock? You have 2 assets to choose from when forming a portfolio: the market portfolio and a risk-free...
The risk-free rate is 2% and the market risk premium is 3%. If stock A has...
The risk-free rate is 2% and the market risk premium is 3%. If stock A has a beta of -1.5, what is the stock's required rate of return?
Risk free rate of return is 5% & required rate of return on the market is...
Risk free rate of return is 5% & required rate of return on the market is 9%. What is the security market line? If corporate beta is 1.8 what does that mean?
Assume that the risk-free rate is 3.5% and the market risk premium is 3%. What is...
Assume that the risk-free rate is 3.5% and the market risk premium is 3%. What is the required return for the overall stock market? Round your answer to two decimal places. % What is the required rate of return on a stock with a beta of 1.9? Round your answer to two decimal places. %
3. The risk-free rate is 2%, and the required return on the market is 8%. What...
3. The risk-free rate is 2%, and the required return on the market is 8%. What is the required return on an asset with a beta of 1.2? What is the reward/risk ratio? What is the required return on a portfolio consisting of 80% of the asset with a beta of 1.2 and the rest in an asset with an average amount of systematic risk? 4. Using the CAPM, show that the ratio of the risk premiums on the two...
A stock has a beta of 0.75. The risk-free rate is 9%, and the market risk premium is 8%. What is the stock’s required rate of return?
REQUIRED RATE OF RETURN A stock has a beta of 0.75. The risk-free rate is 9%, and the market risk premium is 8%. What is the stock’s required rate of return?
PRINCIPLE OF CORPORATE FINANCE 9.      The risk-free rate is 5%, the market risk premium is 8%,...
PRINCIPLE OF CORPORATE FINANCE 9.      The risk-free rate is 5%, the market risk premium is 8%, and the market return is 13%. Stock Y's beta is 1.85 and the standard deviation of its returns is 62.5%. What should be the stock's expected rate of return to make the investor indifferent toward buying or selling the stock? a)      11.66% b)      12.50% c)      15.54% d)      19.80% 10. The expected rate of return of an investment _____. a)      is the median value of...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT