Homework Answers
Expected Return of Stock = 12.25%
Risk-free Rate = 5.00%
Beta = 1.25
Expected Return of Stock = Risk-free Rate + Beta * Market Risk
Premium
12.25% = 5.00% + 1.25 * Market Risk Premium
7.25% = 1.25 * Market Risk Premium
Market Risk Premium = 5.80%
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Problem 2 (15 points): FIN300 Inc's stock has an expected return of 12.25%, a beta of...
5. Porter Inc's stock has an expected return of 12.25%, a beta of 1.25, and is...
5. Porter Inc's stock has an expected return of 12.25%, a beta of 1.25, and is in equilibrium. If the risk-free rate is 5.00%, what is the market risk premium?
SimSim Corporation's stock has an expected return of 12.05%, a beta of 1.25, and is in equilibrium. If the risk-free rat...
SimSim Corporation's stock has an expected return of 12.05%, a beta of 1.25, and is in equilibrium. If the risk-free rate is 5.00%, what is the market risk premium? (Answer in decimal form to the 4th decimal place).
Q2. (10 Points) What is ABC Inc's beta if its expected return is 10.7%, the market...
Q2. (10 Points) What is ABC Inc's beta if its expected return is 10.7%, the market risk premium is 6.5%, and the riskless rate is 2%?
A stock has a beta of 1.25, the expected return on the market is 15 percent,...
A stock has a beta of 1.25, the expected return on the market is 15 percent, and the risk-free rate is 4.60 percent. What must the expected return on this stock be? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Answer is complete but not entirely correct. Expected 13.50 % return 15
Question 22 Stock Y has an expected return of 14% and beta of 1.80. Stock Z...
Question 22 Stock Y has an expected return of 14% and beta of 1.80. Stock Z has an expected return of 11.50% and beta of 1.10. If the risk-free rate is 3.5% and the market risk premium is 6.5%, which security is overvalued? Stock Y, because it plots below the SML Stock Z, because it plots below the SML Stock Z, because it plots above the SML Stock Y, because it plots above the SML No answer text provided. Flag...
Can you please include the formula with the answer as well. Problem 2 (15 points) FIN300...
Can you please include the
formula with the answer as well.
Problem 2 (15 points) FIN300 Corporation's 5-year bonds yield 7.00%, and 5-year T-bonds yield 5.15%. The real risk-free rate is r*-3.0%, the inflation premium for all 5-year bonds is IP 1.75%, the liquidity premium for FIN300's bonds is LP-0.75% versus zero for T-bonds, and the maturity risk premium for all bonds is found with the formula MRP-(-1) x 0.1%, where t number of years to maturity. What is the...
The common stock of United Industries has a beta of 1.34 and an expected return of...
The common stock of United Industries has a beta of 1.34 and an expected return of 14.29 percent. The risk-free rate of return is 3.7 percent. a. What is the market risk premium? 7.90% b. What is the expected return on the market? 11.60% Please check the answers and show all work typed out. No excel or grid style please as I am on mobile.
A stock has an expected return of 13.2 percent, the risk-free rate is 6 percent, and...
A stock has an expected return of 13.2 percent, the risk-free rate is 6 percent, and the market risk premium is 10 percent. What must the beta of this stock be? (Do not round intermediate calculations. Round your answer to minimum 2 decimal places, e.g., 32.16.) ______ Hint: Solve for beta from the formula ER = RF + BETA x (RM - RF) where MRP=RM-RF
The stock of United Industries has a beta a 2.26 and an expected return of 12.0. The risk-free rate of return is 4 perce...
The stock of United Industries has a beta a 2.26 and an expected return of 12.0. The risk-free rate of return is 4 percent. What is the expected return on the market? options: 7.66% 8.69% 8.24% 8.89% 7.54% The expected return on JK stock is 14.00 percent while the expected return on the market is 11.00 percent. The beta of JK stock is 1.5. What is the risk-free rate of return? options: 5.00 percent 3.90 percent 4.90 percent 4.31 percent...
Problem 12-12 Relative Valuation (LO3, CFA2) Stock Y has a beta of 1.00 and an expected return of 13.05 percent. Stock Z has a beta of 0.60 and an expected return of 8 percent. If the risk-free rate...
Problem 12-12 Relative Valuation (LO3, CFA2) Stock Y has a beta of 1.00 and an expected return of 13.05 percent. Stock Z has a beta of 0.60 and an expected return of 8 percent. If the risk-free rate is 5.0 percent and the market risk premium is 7.2 percent, what are the reward-to-risk ratios of Y and Z? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) Reward-to-Risk Ratio Stock Y Stock Z...
5. Porter Inc's stock has an expected return of 12.25%, a beta of 1.25, and is in equilibrium. If the risk-free rate is 5.00%, what is the market risk premium?
Q2. (10 Points) What is ABC Inc's beta if its expected return is 10.7%, the market risk premium is 6.5%, and the riskless rate is 2%?
A stock has a beta of 1.25, the expected return on the market is 15 percent, and the risk-free rate is 4.60 percent. What must the expected return on this stock be? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Answer is complete but not entirely correct. Expected 13.50 % return 15
Can you please include the
formula with the answer as well.
Problem 2 (15 points) FIN300 Corporation's 5-year bonds yield 7.00%, and 5-year T-bonds yield 5.15%. The real risk-free rate is r*-3.0%, the inflation premium for all 5-year bonds is IP 1.75%, the liquidity premium for FIN300's bonds is LP-0.75% versus zero for T-bonds, and the maturity risk premium for all bonds is found with the formula MRP-(-1) x 0.1%, where t number of years to maturity. What is the...
Problem 12-12 Relative Valuation (LO3, CFA2) Stock Y has a beta of 1.00 and an expected return of 13.05 percent. Stock Z has a beta of 0.60 and an expected return of 8 percent. If the risk-free rate is 5.0 percent and the market risk premium is 7.2 percent, what are the reward-to-risk ratios of Y and Z? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) Reward-to-Risk Ratio Stock Y Stock Z...
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