Question

In: Finance

Stock R has a beta of 2.0, Stock S has a beta of 0.65, the required...

Stock R has a beta of 2.0, Stock S has a beta of 0.65, the required return on an average stock is 10%, and the risk-free rate of return is 5%. By how much does the required return on the riskier stock exceed the required return on the less risky stock? Round your answer to two decimal places.

Solutions

Expert Solution


Related Solutions

Stock R has a beta of 2.0, Stock S has a beta of 0.65, the required...
Stock R has a beta of 2.0, Stock S has a beta of 0.65, the required return on an average stock is 10%, and the risk-free rate of return is 5%. By how much does the required return on the riskier stock exceed the required return on the less risky stock? Round your answer to two decimal places.   %
Stock R has a beta of 2.0, Stock S has a beta of 0.25, the required...
Stock R has a beta of 2.0, Stock S has a beta of 0.25, the required return on an average stock is 13%, and the risk-free rate of return is 3%. By how much does the required return on the riskier stock exceed the required return on the less risky stock? Round your answer to two decimal places. %
Stock R has a beta of 1.7, Stock S has a beta of 0.6, the expected...
Stock R has a beta of 1.7, Stock S has a beta of 0.6, the expected rate of return on an average stock is 11%, and the risk-free rate of return is 6%. By how much does the required return on the riskier stock exceed the required return on the less risky stock? Round your answer to two decimal places.
BETA AND REQUIRED RATE OF RETURN a. A stock has a required return of 9%; the...
BETA AND REQUIRED RATE OF RETURN a. A stock has a required return of 9%; the risk-free rate is 5%; and the market risk premium is 3%. What is the stock's beta? Round your answer to two decimal places. b. If the market risk premium increased to 10%, what would happen to the stock's required rate of return? Assume that the risk-free rate and the beta remain unchanged. If the stock's beta is equal to 1.0, then the change in...
Beta and required rate of return A stock has a required return of 12%; the risk-free...
Beta and required rate of return A stock has a required return of 12%; the risk-free rate is 2.5%; and the market risk premium is 3%. What is the stock's beta? Round your answer to two decimal places. B. If the market risk premium increased to 9%, what would happen to the stock's required rate of return? Assume that the risk-free rate and the beta remain unchanged. 1. If the stock's beta is equal to 1.0, then the change in...
Stock A's stock has a beta of 1.30, and its required return is 14.75%. Stock B's...
Stock A's stock has a beta of 1.30, and its required return is 14.75%. Stock B's beta is 0.80. If the risk-free rate is 4.75%, what is the required rate of return on B's stock? (Hint: First find the market risk premium.) Select the correct answer. a. 10.86% b. 10.88% c. 10.90% d. 10.92% e. 10.94%
Suppose that a portfolio consists of the following stocks: Stock Amount Beta Chevron $25,000 0.65 General...
Suppose that a portfolio consists of the following stocks: Stock Amount Beta Chevron $25,000 0.65 General Electric 50,000 1.30 Whirlpool 25,000 1.55 The risk-free rate (rf) is 5 percent and the market risk premium (rm-rf) is 7.2 percent. Determine the beta for the portfolio. Round your answer to two decimal places. Determine how much General Electric stock one must sell and reinvest in Chevron stock in order to reduce the beta of the portfolio to 1.00. Do not round intermediate...
Stock A has a beta of 1.5, but Stock B has a beta of 0.5. You...
Stock A has a beta of 1.5, but Stock B has a beta of 0.5. You expect the market to increase by 7.5 percent and you could earn 2.0 percent in a risk-free asset. What is the required return for each stock? If you invest $3,500 in Stock A and $6,500 in Stock B, what is the portfolio beta?
4.   Stock A has a beta of 1.3, Stock B has a beta of 0.8, the...
4.   Stock A has a beta of 1.3, Stock B has a beta of 0.8, the expected rate of return on an average stock is 11%, and the risk-free rate of return is 6.5%. By how much does the required return on the riskier stock exceed the required return on the less risky stock? (Work needed)
Partridge Plastic's stock has an estimated beta of 1.2, and its required rate of return is...
Partridge Plastic's stock has an estimated beta of 1.2, and its required rate of return is 10.1 percent. Cleaver Motors' stock has a beta of 1.3, and the risk - free rate is 4.7 percent. What is the required rate of return on Cleaver Motors' stock? [HINT: First, use Partridge’s information to find the Market Risk Premium. Then use that MRP to figure the required rate of return on Cleaver. Express your answer as a decimal, with at least four...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT