The water company’s beta is 0.5, the expected returnon the market is seven percent and the...
The water company’s beta is 0.5, the expected returnon the market is seven percent and the expected return on the risk-free asset is one percent. Calculate the expected rate-of-return the regulator should use when setting the regulated price for the water company?
Homework Answers
Expected rate of return = Rf + beta x (Rm - Rf)
Rm = 7%
Rf = 1% and beta = 0.5
Expected rate of return = 1% + 0.5 x (7% - 1%) = 4%
Add Answer to:
The water company’s beta is 0.5, the expected returnon the
market is seven percent and the...
A stock has an expected return of 8 percent, its beta is 0.5, and the risk-free...
A stock has an expected return of 8 percent, its beta is 0.5, and the risk-free rate is 3.6 percent. The expected return on the market must be Question 2 options: 10.2% 14.5% 15.2% 11.1% 12.4%
Asset W has an expected return of 12.3 percent and a beta of 1.2. If the...
Asset W has an expected return of 12.3 percent and a beta of 1.2. If the risk-free rate is 4 percent, complete the following table for portfolios of Asset W and a risk-free asset. Consider the relationship between portfolio expected return and portfolio beta. What is the slope of the security market line (SML)?
1. A stock has an expected return of 9 percent, its beta is 0.5, and the...
1. A stock has an expected return of 9 percent, its beta is 0.5, and the risk-free rate is 3.6 percent. What must the expected return on the market be? rev: 09_20_2012 10.80% 15.12% 13.68% 14.98% 14.40% 2. You own the following portfolio of stocks. What is the portfolio weight of stock C? Stock Number of Shares Price per Share A 120 $38 B 810 $34 C 450 $58 D 260 $57 35.74 percent 20.30 percent 37.72 percent 64.26 percent...
What is the expected market return if the expected return on asset X is 20 percent,...
What is the expected market return if the expected return on asset X is 20 percent, its beta is 1.5, and the risk free rate is 5 percent?
12. Portfolio has beta=-0.5; its alpha is -2%, risk free rate is 5%; market expected return...
12. Portfolio has beta=-0.5; its alpha is -2%, risk free rate is 5%; market expected return is 8%. Find market risk premium R_mt, expected return r_portfolio and excess return R_portfolio. Use formula R_portfolio =beta portfolio *R_market]+alpha+e_portfolio; Where for each security, R=r-r_free is excess return; Is such portfolio over-, under- or fairly priced? Assume, portfolio is well diversified. Which term (s) should be negligible? Follow the guideline below to take the steps using a well- diversified portfolio to build an arbitrage...
A stock has a beta of 1.55, the expected return on the market is 16 percent,...
A stock has a beta of 1.55, the expected return on the market is 16 percent, and the risk-free rate is 5.6 percent. What must the expected return on this stock be?
A stock has a beta of 13, the expected return on the market is 9 percent,...
A stock has a beta of 13, the expected return on the market is 9 percent, and the risk- free rate is 3.6 percent. What must the expected return on this stock be?
A stock has a beta of 1.8, the expected return on the market is 5 percent,...
A stock has a beta of 1.8, the expected return on the market is 5 percent, and the risk-free rate is 2 percent. What must the expected return on this stock be?
A stock has a beta of .93, the expected return on the market is 10.9 percent,...
A stock has a beta of .93, the expected return on the market is 10.9 percent, and the risk-free rate is 2.7 percent. What must the expected return on this stock be?
A stock has a beta of 1.05, the expected return on the market is 14 percent,...
A stock has a beta of 1.05, the expected return on the market is 14 percent, and the risk-free rate is 7.7 percent. What must the expected return on this stock be?
Asset W has an expected return of 12.3 percent and a beta of 1.2. If the risk-free rate is 4 percent, complete the following table for portfolios of Asset W and a risk-free asset. Consider the relationship between portfolio expected return and portfolio beta. What is the slope of the security market line (SML)?
12. Portfolio has beta=-0.5; its alpha is -2%, risk free rate is 5%; market expected return is 8%. Find market risk premium R_mt, expected return r_portfolio and excess return R_portfolio. Use formula R_portfolio =beta portfolio *R_market]+alpha+e_portfolio; Where for each security, R=r-r_free is excess return; Is such portfolio over-, under- or fairly priced? Assume, portfolio is well diversified. Which term (s) should be negligible? Follow the guideline below to take the steps using a well- diversified portfolio to build an arbitrage...
A stock has a beta of 13, the expected return on the market is 9 percent, and the risk- free rate is 3.6 percent. What must the expected return on this stock be?
Most questions answered within 3 hours.
-
If the Stratosphere elevator in Las Vegas is 500 m above the
ground when the cables...
asked 9 minutes ago -
identify at least one other characteristics of the soils/sand
that may have impacted the growth of...
asked 15 minutes ago -
True or False
The following statements refer to The Web of Belief
10. An explanation of...
asked 17 minutes ago -
15)___________ A study was conducted to
test the effectiveness of aspirin on reducing
asked 24 minutes ago -
How fast must a centrifuge spin if a particle 8 cm from the axis
of rotation...
asked 26 minutes ago -
Which of the following is characteristic of a single exposure
common vehicle outbreak?
a. Wide range...
asked 28 minutes ago -
You are a member of an alpine rescue team and must get a box of
supplies,...
asked 30 minutes ago -
Where the conservation of biodiversity is concerned, can I be
assisted with these questions:
1. What...
asked 31 minutes ago -
A 79-Ω loudspeaker, a 8.0-Ω loudspeaker, and a 3.7-Ω loudspeaker
are connected in parallel across the...
asked 1 hour ago -
If X has a normal distribution with mean µ =
12 and variance σ2 = 9,...
asked 1 hour ago -
An example of an operational taxonomic unit
(OTU) is
a. Multiple sequence alignment.
b. Protein sequence....
asked 1 hour ago -
Electrons flow through a 2.7-mm-diameter aluminum wire at
2.5×10−4 m/s .
How many electrons move through...
asked 1 hour ago