Question
In: Finance
Consider the CAPM. The risk-free rate is 3% and the expected return on the market is...
Consider the CAPM. The risk-free rate is 3% and the expected return on the market is 17%. The expected return on a stock with a beta of 1.2 is %.
Please enter your answer with TWO decimal points.
Solutions
Expert Solution
According to CAP.M
Expected return = Risk Free return + beta × ( Market return - risk free return)
= 3% + 1.2 ×(17%-3%)
= 3% + 1.2(14%)
= 3% + 16.8%
= 19.8%
Expected return = 19.8%
jeff jeffy answered 2 years agoRelated Solutions
1. Consider the CAPM. The risk-free rate is 4%, and the expected return on the market...
1. Consider the CAPM. The risk-free rate is 4%, and the expected
return on the market is 18%. What is the expected return on a stock
with a beta of 1.2?
A.
6%
B.
15.6%
C.
18%
D.
20.8%
2. The CAL provided by combinations of 1-month T-bills and a
broad index of common stocks (i.e. market portfolio) is called the
______.
A.
SML
B.
CAPM
C.
CML
D.
total return line
Assume that the risk-free rate is 3% and the expected return on the market is 8.5%....
Assume that the risk-free rate is 3% and the expected return on
the market is 8.5%. What is the required rate of return on a stock
with a beta of 1.3?
a.
10.15%
b.
14.05%
c.
11.05%
d.
7.15%
a) Given a risk-free rate of 3%, an expected return of the market of 9%. What...
a) Given a risk-free rate of 3%, an expected return of the
market of 9%. What is the risk premium for an asset with b = 1?
b) What is the required return of an asset with b = 1.6?
c) What is the reward to risk ratio?
d) What is the expected return on a portfolio of 30% of the
asset in b) and the remainder in an asset with an average amount of
systematic risk?
The risk-free rate of return is 6%, the expected rate of return on the market portfolio...
The risk-free rate of return is 6%, the expected rate of return
on the market portfolio is 15%, and the stock of Xyrong Corporation
has a beta coefficient of 2.3. Xyrong pays out 45% of its earnings
in dividends, and the latest earnings announced were $9.00 per
share. Dividends were just paid and are expected to be paid
annually. You expect that Xyrong will earn an ROE of 18% per year
on all reinvested earnings forever.
a. What is the...
The risk-free rate of return is 10.0%, the expected rate of return on the market portfolio...
The risk-free rate of return is 10.0%, the expected rate of
return on the market portfolio is 17%, and the stock of Xyrong
Corporation has a beta coefficient of 1.6. Xyrong pays out 30% of
its earnings in dividends, and the latest earnings announced were
$15 per share. Dividends were just paid and are expected to be paid
annually. You expect that Xyrong will earn an ROE of 20% per year
on all reinvested earnings forever.
a. What is the...
The risk-free rate of return is 6%, the expected rate of return on the market portfolio...
The risk-free rate of return is 6%, the expected rate of return
on the market portfolio is 14%, and the stock of Xyrong Corporation
has a beta coefficient of 1.3. Xyrong pays out 50% of its earnings
in dividends, and the latest earnings announced were $8.00 per
share. Dividends were just paid and are expected to be paid
annually. You expect that Xyrong will earn an ROE of 15% per year
on all reinvested earnings forever.
a. What is the...
5. The risk-free rate of return is 8%, the expected rate of return on the market...
5. The risk-free rate of return is 8%, the expected rate of
return on the market portfolio is 15%, and the stock of Xyong
Corporation has a beta of 1.2. Xyong pays out 40% of its earnings
in dividends, and the latest earnings announced were $10 per share.
Dividends were just paid and are expected to be paid annually. You
expect that Xyong will earn an ROE of 20% per year on all
reinvested earnings forever.
(a) What is the...
The risk-free rate of return is 9.0%, the expected rate of return on the market portfolio...
The risk-free rate of return is 9.0%, the expected rate of
return on the market portfolio is 14%, and the stock of Xyrong
Corporation has a beta coefficient of 2.0. Xyrong pays out 50% of
its earnings in dividends, and the latest earnings announced were
$20 per share. Dividends were just paid and are expected to be paid
annually. You expect that Xyrong will earn an ROE of 18% per year
on all reinvested earnings forever.
a. What is the...
The risk-free rate of return is 9.0%, the expected rate of return on the market portfolio...
The risk-free rate of return is 9.0%, the expected rate of
return on the market portfolio is 14%, and the stock of Xyrong
Corporation has a beta coefficient of 2.0 resulting in a required
rate of return of 19.00%. Xyrong pays out 50% of its earnings in
dividends, and the latest earnings announced were $20 per share.
Dividends were just paid and are expected to be paid annually. You
expect that Xyrong will earn an ROE of 18% per year...
The risk-free rate of return is 4 percent, and the expected return on the market is...
The risk-free rate of return is 4 percent, and the expected
return on the market is 8.2 percent. Stock A has a beta coefficient
of 1.6, an earnings and dividend growth rate of 6 percent, and a
current dividend of $2.20 a share. Do not round intermediate
calculations. Round your answers to the nearest cent.
What should be the market price of the stock? $
If the current market price of the stock is $32.00, what should
you do? The...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- What are the two reasons that limit the ability of correlational studies to provide information on...
- Suppose that 20 monthly payments of $100 each are followed by 30 monthly payments of $200...
- D. Explain what it means for recommendations to be specific and actionable. E. Discuss how charts...
- Capital Toys’ management is considering eliminating product A, which has been showing a loss for several...
- Computer Networks IT 210 Please Use your own words . sorry No handwriting no copy paste...
- The Coronavirus will obviously impact the economy of big organizations like FIFA or the NBA but...
- Question: what is the difference between rights of assertion and observation assertion. Include which financial statements...
ADVERTISEMENT