Question
In: Economics
Suppose the risk-free rate is 1% and the market’s risk premium is 7%. If a portfolio...
Suppose the risk-free rate is 1% and the market’s risk premium is 7%. If a portfolio has a Beta of 1.2, what rate of return would you expect on this portfolio?
Select one:
a. Cannot tell from the information given
b. 9.6%
c. 8.7%
d. 9.4%
Solutions
Rahul Sunny answered 2 years agoRelated Solutions
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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%...
Vanessa Inc has a beta of .7. The market risk premium is 8% and risk-free rate...
Vanessa Inc has a beta of .7. The market risk premium is 8% and
risk-free rate is 5%. Vanessa Inc’s last dividend was
$1.20 per share, and the dividend is expected to grow at 7%
indefinitely. The stock price is currently $40. Vanessa
Inc’s target capital structure is 30% debt and 70% equity. It cost
of debt is 10% before taxes. The tax rate is 40%.
a) Calculate the cost of equity under:
The dividend growth
CAPM
Average of the...
A company has unleveraged beta of 1.7, risk free rate 7% and market risk premium for...
A company has unleveraged beta of 1.7, risk free rate
7% and market risk premium for 5%. The applicable tax rate is
40%.
The company needs to finance its new project having three different
scenarios of financing:
Scenario Debt ratio Interest rate (before tax)
EPS
1 0% 0% $2.7
2 20% 12% $3.8
3 80% 17% $4.2
2) If the company is unleveraged, its Price per share
is *
$11.75
$22.41
$17.42
None of the above
3) If the company...
Suppose the risk-free rate is 1.24% and an analyst assumes a market risk premium of 6.69%....
Suppose the risk-free rate is 1.24% and an analyst assumes a
market risk premium of 6.69%. Firm A just paid a dividend of $1.31
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260.00 million shares outstanding. Firm B just paid a dividend of
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and believes that dividends will...
Suppose the risk-free rate is 1.88% and an analyst assumes a market risk premium of 7.11%....
Suppose the risk-free rate is 1.88% and an analyst assumes a
market risk premium of 7.11%. Firm A just paid a dividend of $1.45
per share. The analyst estimates the β of Firm A to be 1.21 and
estimates the dividend growth rate to be 4.11% forever. Firm A has
277.00 million shares outstanding. Firm B just paid a dividend of
$1.62 per share. The analyst estimates the β of Firm B to be 0.87
and believes that dividends will...
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