Question

In: Finance

A stock has a beta of .89 and a reward-to-risk ratio of 6.53 percent. If the...

A stock has a beta of .89 and a reward-to-risk ratio of 6.53 percent. If the risk-free rate is 2.5 percent, what is the stock's expected return?

4.53

7.27

7.99

7.67

8.31

Solutions

Expert Solution


Related Solutions

A stock has an expected return of 10.45 percent and its reward-to-risk ration is 7.2 percent....
A stock has an expected return of 10.45 percent and its reward-to-risk ration is 7.2 percent. If the risk-free rate is 2.55 percent, what is the stock's beta?
The risk-free rate is 4.6 percent.  Stock A has a beta = 1.2 and Stock B has...
The risk-free rate is 4.6 percent.  Stock A has a beta = 1.2 and Stock B has a beta = 1.  Stock A has a required return of 12.1 percent.  What is Stock B’s required return? Group of answer choices 11.05% 10.85% 10.95% 11.15% 11.25% You observe the following yield curve for Treasury securities: Maturity             Yield 1 Year                3.20% 2 Years              4.40% 3 Years              5.20% 4 Years              5.40% 5 Years              7.40% Assume that the pure expectations hypothesis holds.  What does the market expect will be the yield on 3-year securities,...
Stock M has a beta of 1.2. The market risk premium is 7.8 percent and the...
Stock M has a beta of 1.2. The market risk premium is 7.8 percent and the risk-free rate is 3.6 percent. Assume you compile a portfolio equally invested in Stock M, Stock N, and a risk-free security that has a portfolio beta equal to the overall market. What is the expected return on the portfolio? a.) 11.2% b.) 10.8% c.) 10.4% d.) 11.4% e.) 11.7%
2. A stock has a beta of 1.35, the market risk premium is 6 percent, and...
2. A stock has a beta of 1.35, the market risk premium is 6 percent, and the risk-free rate is 3.5 percent. What is the required rate of return on this stock? Group of answer choices a. 3.50% b. 6.87% c. 11.60% d. 13.13%
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 company’s stock has a beta of 1.34. The market risk premium is 7.90 percent and...
A company’s stock has a beta of 1.34. The market risk premium is 7.90 percent and the risk-free rate is 3.00 percent annually. The company also has a bond outstanding with a coupon rate of 7.4 percent and semiannual payments. The bond currently sells for $1,910 and matures in 16 years. The par value is $2000. The company's debt–equity ratio is .53 and tax rate is 30 percent. a. What is the company's cost of equity? (Do not round intermediate...
A stock has a beta of 2.2, the risk-free rate is 6 percent, and the expected...
A stock has a beta of 2.2, the risk-free rate is 6 percent, and the expected return on the market is 12 percent. Using the CAPM, what would you expect the required rate of return on this stock to be? What is the market risk premium?
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...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT