Expected return=risk free rate+beta*(market rate-risk free rate)
=5+1.2*(14-5)
which is equal to
=15.8%
Consider the CAPM. The risk-free rate is 5%, and the expected return on the market is...
Consider the CAPM. The risk-free rate is 6%, and the expected return on the market is 18%. What is the expected return on a stock with a beta of 1.3? Multiple Choice o 6% o 15.6% o 18% o 21.6%
Consider the CAPM. The risk-free rate is 5%, and the expected return on the market is 17%. What is the expected return on a stock with a beta of 1.5? A. 31% B. 28% C. 13% D. 23%
According to the CAPM, what is the market risk premium given an expected return on a security of 13.6%, a stock beta of 1.2, and a risk-free interest rate of 4%? Multiple Choice 4% 4.8% 6.6% 8%
8 MC algo 13-26 CAPM The risk-free rate is 3.4 percent and the market expected return is 11.9 percent. What is the expected return of a stock that has a beta of 1.19? oints Multiple Choice References .52% 15.54% 12.01% 19.02% 17.56%
According to the CAPM, what is the expected market return given an expected return on a security of 17.0%, a stock beta of 1.5, and a risk-free interest rate of 5%? Multiple Choice 11.3% 18.0% 7.5% 13%
5. 14. Using CAPM. A stock has an expected return of 11.4 percent, the risk-free rate is 3.7 percent, and the market risk premium is 6.8 percent. What must the beta of this stock be?
According to the CAPM, what is the market risk premium given an expected return on a security of 9.8%, a stock beta of 1.2, and a risk-free interest rate of 5%? o 6.00% o 6.60% o 5.00% o 4.00%
11. Assume that the Risk Free rate is 5% and the Expected Return on the market is 10%. Show if these stocks are under, over, or fairly valued. Illustrate it in a chart with the SML and the expected returns of the stocks. CAPM returnasseti RiskFree + [E(Rmarket)- Risk Free] Basset i Security САРМ Over/Under E(Return) Beta Return |Valued? Stock W Stock Y Stock Z 0.035 0.85 1.2 0.095 0.12 1.1 Show (and explain) your results in the following chart....
EXPECTED AND REQUIRED RATES OF RETURN Assume that the risk-free rate is 5% and the market risk premium is 6%. What is the required return for the overall stock market? What is the required rate of return on a stock with a beta of 1.2?
3. Expected return and CAPM Suppose the risk-free rate is 4% and the market portfolio and stock j have the following return distributions: Probability in tot Market return -.15 .05 .15 .20 Return for i --30 .00 .20 .50 a. Find the expected market return, Im. b. Find the variance of the market return, c. Find the expected return for stock j, r;. d. Find the covariance of j and the market, Oim. e. What is J's beta?