Question

In: Finance

MFI Inc. has a beta of 1.51. If the expected market return is 13.5 percent and...

MFI Inc. has a beta of 1.51. If the expected market return is 13.5 percent and the​ risk-free rate is 5.0 percent, what is the appropriate required return of MFI​ (using the​ CAPM)?

Solutions

Expert Solution


Related Solutions

The beta for Cowboy Industries, Inc. is 0.8. The expected return on the market portfolio is...
The beta for Cowboy Industries, Inc. is 0.8. The expected return on the market portfolio is 12.0% and the risk-free rate is 2.0%. If the CAPM/SML is correct, what is Cowboy Manufacturing’s required (expected) return?
A stock has a beta of 1.07, the expected return on the market is 0.11, and...
A stock has a beta of 1.07, the expected return on the market is 0.11, and the risk-free rate is 0.05. What must the expected return on this stock be? Enter the answer with 4 decimals (e.g. 0.1234).
A stock has a beta of 0.56, the expected return on the market is 0.06, and...
A stock has a beta of 0.56, the expected return on the market is 0.06, and the risk-free rate is 0.04. What must the expected return on this stock be? Enter the answer with 4 decimals (e.g. 0.1234). You own a portfolio that has $2,367 invested in Stock A and $5,423 invested in Stock B. If the expected returns on these stocks are -0.06 and -0.12, respectively, what is the expected return on the portfolio? Enter the answer with 4...
A stock has an expected return of 12.66 percent. The beta of the stock is 1.5...
A stock has an expected return of 12.66 percent. The beta of the stock is 1.5 and the risk-free rate is 5 percent. What is the market risk premium? (Answer in a percentage, but do not include the % sign and round to two decimal places, i.e., 18.35)
Stock J has a beta of 1.47 and an expected return of 15.8 percent.
Stock J has a beta of 1.47 and an expected return of 15.8 percent. Stock K has a beta of 1.05 and an expected return of 11.9 percent. What is the risk-free rate if these securities both plot on the security market line?Group of answer choices2.15 percent4.41 percent3.88 percent3.34 percent4.68 percent
Asset W has an expected return of 12.8 percent and a beta of 1.25. If the...
Asset W has an expected return of 12.8 percent and a beta of 1.25. If the risk-free rate is 4.7 percent, complete the following table for portfolios of Asset W and a risk-free asset. (Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations. Enter your expected returns as a percent rounded to 2 decimal places, e.g., 32.16, and your beta answers to 3 decimal places, e.g., 32.161.) Percentage of Portfolio in Asset...
A stock has a beta of 1.4, an expected return of 17.2 percent, and lies on...
A stock has a beta of 1.4, an expected return of 17.2 percent, and lies on the security market line. A risk-free asset is yielding 3.2 percent. You want to create a portfolio that is comprised of the stock and the risk free and will have a portfolio beta of 0.8. What is the expected return on this portfolio? a) 12.33% b) 13.87% c) 11.20% d) 14.41%
Evaluating risk and return. Stock X has an expected return of 9.5 percent, a beta coefficient...
Evaluating risk and return. Stock X has an expected return of 9.5 percent, a beta coefficient of 0.9, and a 30 percent standard deviation of expected returns. Stock Y has a 13 percent expected return, a beta coefficient of 1.3, and a 20 percent standard deviation. The risk-free rate is 5 percent, and the market risk premium is 5.5 percent. a) Calculate the coefficient of variation of each stock. b) Which stock is riskier for diversified investors? Which stock is...
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...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT