Question

In: Finance

An analyst finds that the beta coefficient of the security-DTX is 1.86 and the expected rate...

An analyst finds that the beta coefficient of the security-DTX is 1.86 and the expected rate of return from this security is 17.71% as per CAPM. If the government bond is yielding 4.71%, find the market risk premium.

[Round the final answer to two decimal places. If your answer is 12.34%, write only 12.34]

Solutions

Expert Solution

Expected return as per CAPM = Risk free rate + beta*Market risk premium

17.71% = 4.71% + 1.86*Market risk premium

Market risk premium = 6.9892%

i.e. 6.99%

i.e. 6.99

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

The beta coefficient for security-DTX is 1.70. If the market risk premium is 11.36% and the...
The beta coefficient for security-DTX is 1.70. If the market risk premium is 11.36% and the government bond yields 8.00%, find the expected return from the security-DTX using the CAPM. [Round the final answer to two decimal places. If your answer is 12.34%, write only 12.34.]
Use Excel to compute the Beta Coefficient for the following security (J), using first, regression analysis...
Use Excel to compute the Beta Coefficient for the following security (J), using first, regression analysis to find the slope of the Characteristic Line for J, given the returns for J and the Market Portfolio Below. Stock J Market 0.14 0.13 0.07 0.1 0.05 0.12 0.01 0.01 0.11 0.15 0.12 1.6 0.11 0.14 0.15 0.11 0.2 0.06 0.02 0.01 0.01 0.11 Use the data from B. above and Excel to compute the Beta coefficient using the covariation equation.
Stock X has a 9.0% expected return, a beta coefficient of 0.7, and a 35% standard...
Stock X has a 9.0% expected return, a beta coefficient of 0.7, and a 35% standard deviation of expected returns. Stock Y has a 13.0% expected return, a beta coefficient of 1.3, and a 30% standard deviation. The risk-free rate is 6%, and the market risk premium is 5%. Calculate each stock's coefficient of variation. Do not round intermediate calculations. Round your answers to two decimal places. CVx = CVy = Which stock is riskier for a diversified investor? For...
Stock X has a 9.0% expected return, a beta coefficient of 0.7, and a 35% standard...
Stock X has a 9.0% expected return, a beta coefficient of 0.7, and a 35% standard deviation of expected returns. Stock Y has a 12.0% expected return, a beta coefficient of 1.1, and a 30% standard deviation. The risk-free rate is 6%, and the market risk premium is 5%. Calculate each stock's coefficient of variation. Do not round intermediate calculations. Round your answers to two decimal places. CVx = CVy = Which stock is riskier for a diversified investor? For...
Stock X has a 10.5% expected return, a beta coefficient of 1.0, and a 40% standard...
Stock X has a 10.5% expected return, a beta coefficient of 1.0, and a 40% standard deviation of expected returns. Stock Y has a 12.0% expected return, a beta coefficient of 1.1, and a 30.0% standard deviation. The risk-free rate is 6%, and the market risk premium is 5%. Calculate each stock's coefficient of variation. Round your answers to two decimal places. Do not round intermediate calculations.
Stock X has a 9.5% expected return, a beta coefficient of 0.8, and a 30% standard...
Stock X has a 9.5% expected return, a beta coefficient of 0.8, and a 30% standard deviation of expected returns. Stock Y has a 12.0% expected return, a beta coefficient of 1.1, and a 25.0% standard deviation. The risk-free rate is 6%, and the market risk premium is 5%. Calculate each stock's coefficient of variation. Round your answers to two decimal places. Do not round intermediate calculations. CVx = CVy = Which stock is riskier for a diversified investor? For...
Stock X has a 10.5% expected return, a beta coefficient of 1.0, and a 35% standard...
Stock X has a 10.5% expected return, a beta coefficient of 1.0, and a 35% standard deviation of expected returns. Stock Y has a 12.0% expected return, a beta coefficient of 1.1, and a 30.0% standard deviation. The risk-free rate is 6%, and the market risk premium is 5%. Calculate each stock's coefficient of variation. Round your answers to two decimal places. Do not round intermediate calculations. CVx = CVy = Which stock is riskier for a diversified investor? For...
Stock X has a 9.5% expected return, a beta coefficient of 0.8, and a 40% standard...
Stock X has a 9.5% expected return, a beta coefficient of 0.8, and a 40% standard deviation of expected returns. Stock Y has a 12.0% expected return, a beta coefficient of 1.1, and a 25% standard deviation. The risk-free rate is 6%, and the market risk premium is 5%. Calculate each stock's coefficient of variation. Do not round intermediate calculations. Round your answers to two decimal places. CVx = CVy = Which stock is riskier for a diversified investor? For...
Stock X has a 9.5% expected return, a beta coefficient of 0.8, and a 30% standard...
Stock X has a 9.5% expected return, a beta coefficient of 0.8, and a 30% standard deviation of expected returns. Stock Y has a 13.0% expected return, a beta coefficient of 1.3, and a 30.0% standard deviation. The risk-free rate is 6%, and the market risk premium is 5%. A. Calculate each stock's coefficient of variation. Round your answers to two decimal places. Do not round intermediate calculations. CVx = CVy = B. Which of the following stock is riskier...
Stock X has a 9.5% expected return, a beta coefficient of 0.8, and a 40% standard...
Stock X has a 9.5% expected return, a beta coefficient of 0.8, and a 40% standard deviation of expected returns. Stock Y has a 12.0% expected return, a beta coefficient of 1.1, and a 30.0% standard deviation. The risk-free rate is 6%, and the market risk premium is 5%. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. Open spreadsheet Calculate each stock's coefficient...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT