A stock has an expected return of 0.07, its beta is 0.75, and the risk-free rate...

A stock has an expected return of 0.07, its beta is 0.75, and the risk-free rate is 0.03. What must the expected return on the market be? Enter the answer with 4 decimals (e.g. 0.0567).

Expert Solution

Expected return = Risk-free rate + Beta(Market return - Risk-free rate)

0.07 = 0.03 + 0.75(Market return - 0.03)

0.07 - 0.03 = 0.75Market return - 0.0225

0.07 - 0.03 + 0.0225 = 0.75Market return

0.0625 = 0.75Market return

Market return = 0.0625 / 0.75

Market return = 0.0833

jeff jeffy answered 2 years ago

The beta on Stock A equals 0.75, and the expected return equals 8.625%. The risk free...

The beta on Stock A equals 0.75, and the expected return equals 8.625%. The risk free rate equals 3%. Calculate the expected return on the market. (Enter percentages as decimals and round to 4 decimals)

A stock has an expected return of 0.06, its beta is 1.12, and the risk-free rate...

A stock has an expected return of 0.06, its beta is 1.12, and the risk-free rate is 0.03. What must the expected return on the market be? Enter the answer with 4 decimals (e.g. 0.0567). You own a stock portfolio invested 32 percent in Stock Q, 22 percent in Stock R, 19 percent in Stock S, and 27 percent in Stock T. The betas for these four stocks are 1.87, 1.81, 2.64, and 0.99, respectively. What is the portfolio beta?...

A stock has an expected return of 0.12, its beta is 0.94, and the risk-free rate...

A stock has an expected return of 0.12, its beta is 0.94, and the risk-free rate is 0.02. What must the expected return on the market be? Enter the answer with 4 decimals (e.g. 0.0567). You own a stock portfolio invested 32 percent in Stock Q, 22 percent in Stock R, 19 percent in Stock S, and 27 percent in Stock T. The betas for these four stocks are 1.93, 1.64, 0.91, and 1.42, respectively. What is the portfolio beta?...

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?

Stock A has a beta of 1.5, the risk-free rate is 4% and the return on...

Stock A has a beta of 1.5, the risk-free rate is 4% and the return on the market is 9%. If inflation changes by -2%, by how much will the required return on Stock A change?

Stock A has a beta of 0, the risk-free rate is 4% and the return on...

Stock A has a beta of 0, the risk-free rate is 4% and the return on the market is 9%. If the market risk premium changes by 8%, by how much will the required return on Stock A change?

A stock has a beta of 1.6 and an expected return of 14 percent. A risk-free...

A stock has a beta of 1.6 and an expected return of 14 percent. A risk-free asset currently earns 4 percent. a) What is the expected return on a portfolio that is equally invested in the two assets? b) If a portfolio of the two assets has a beta of 0.8, what are the portfolio weights? c) If a portfolio of the two assets has an expected return of 10 percent, what is its beta? d) If all assets in...

A stock has a beta of 0.9 and an expected return of 9 percent. A risk-free...

A stock has a beta of 0.9 and an expected return of 9 percent. A risk-free asset currently earns 4 percent. a. What is the expected return on a portfolio that is equally invested in the two assets? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) b. If a portfolio of the two assets has a beta of 0.5, what are the portfolio weights? (Do not round intermediate calculations. Enter your answers...

A stock has a beta of 0.6 and an expected return of 10 percent. A risk-free...

A stock has a beta of 0.6 and an expected return of 10 percent. A risk-free asset currently earns 4.1 percent. a. What is the expected return on a portfolio that is equally invested in the two assets? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) b. If a portfolio of the two assets has a beta of 0.57, what are the portfolio weights? (Do not round intermediate calculations. Enter your answers...

A stock has a beta of 1.38 and an expected return of 13.6 percent. A risk-free...

A stock has a beta of 1.38 and an expected return of 13.6 percent. A risk-free asset currently earns 4.7 percent. a. What is the expected return on a portfolio that is equally invested in the two assets? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Expected return % b. If a portfolio of the two assets has a beta of .98, what are the portfolio weights? (Do not...

Question