ZuoTi.Pro
Question

Security X has an expected rate of return of 13% and a beta of 1.15. The risk-free rate is 5%, and the market expected rate o

business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Beta= 1015 Risk free rate (Rf) = 5% Market return (Rm) = 15). As per CAPM, equilibrium retum = R8+ (Rm- Rf) * Beta = = 5+ (15

1 0
Add a comment
Know the answer?
Add Answer to:
Security X has an expected rate of return of 13% and a beta of 1.15. The...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • Security X has a rate of return of 13% and a beta of 1.15. The risk-free...

    Security X has a rate of return of 13% and a beta of 1.15. The risk-free rate is 5% and the market expected rate of return is 10%. According to the capital asset pricing model, security X is 1) fairly priced 2) underpriced 3) overpriced 4) None of the answers are correct Security X has a rate of return of 13% and a beta of 1.15. The risk-free rate is 5% and the market expected rate of return is 10%....

  • Security X has an expected rate of return of 21% and a beta of 1.85. The...

    Security X has an expected rate of return of 21% and a beta of 1.85. The risk-free rate is 3%, and the market expected rate of return is 12%. According to the capital asset pricing model, security X is _________. A. overpriced B. none of these answers C. underpriced D. fairly priced

  • The expected return on the market portfolio is 15%. The risk-free rate is 8%. The expected...

    The expected return on the market portfolio is 15%. The risk-free rate is 8%. The expected return on SDA Corp. common stock is 16%. The β of SDA Corp. common stock is 1.25. Within the context of the Capital Asset Pricing Model, is the common stock of SDA Corp. overpriced, underpriced or fairly priced?

  • The expected return on the market portfolio is 20%. The risk-free rate is 12%. The expected...

    The expected return on the market portfolio is 20%. The risk-free rate is 12%. The expected return on SDA Corp. common stock is 19%. The beta of SDA Corp. common stock is 1.20. Within the context of the capital asset pricing model, _________. SDA Stock is underpriced SDA stock is fairly priced SDA stock's alpha is 2.6% SDA Corp. stock's alpha is –2.60%

  • Suppose the rate of return on short-term govemment securities (perceived to be risk free) is about...

    Suppose the rate of return on short-term govemment securities (perceived to be risk free) is about 5%. Suppose also that the expected rate of return required by the market for a portfolio with a beta of 1 is 12%. According to the capital asset pricing model (security market line): a. What is the expected rate of return on the market portfolio? b. What would be the expected rate of return on a stock with B 0? c. Suppose you consider...

  • CAPM and Security Pricing Stock A has an expected return of 28% and a beta of 2.3. Stock B has an expected return of...

    CAPM and Security Pricing Stock A has an expected return of 28% and a beta of 2.3. Stock B has an expected return of 28% and a beta of 2.3 when the risk free rate is 6%. Which of the following statements are correct? I. Stock A is underpriced relative to Stock B II. Stock B is underpriced relative to Stock A III. This situation is inconsistent with the CAPM IV. This situation is consistent with the CAPM Multiple Choice:...

  • Suppose you observe the following situation: Security Beta Expected Return Peat Co. 1.15 10.0 Re-Peat Co....

    Suppose you observe the following situation: Security Beta Expected Return Peat Co. 1.15 10.0 Re-Peat Co. 0.90 9.0 Assume these securities are correctly priced. Based on the CAPM, what is the expected return on the market? What is the risk-free rate? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) Expected return on market % Risk-free rate %

  • The risk-free rate is 6% and the expected rate of return on the market portfolio is...

    The risk-free rate is 6% and the expected rate of return on the market portfolio is 13%. a. Calculate the required rate of return on a security with a beta of 1.25. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) b. If the security is expected to return 16%, is it overpriced or underpriced? 

  • Suppose the rate of return on short-term government securities (perceived to be risk-free) is about 7%....

    Suppose the rate of return on short-term government securities (perceived to be risk-free) is about 7%. Suppose also that the expected rate of return required by the market for a portfolio with a beta of 1 is 15%. According to the capital asset pricing model: a. What is the expected rate of return on the market portfolio? (Round your answer to 2 decimal places.) Expected rate of return b. What would be the expected rate of return on a stock...

  • Chapter 13 Practice Test Question 17 Beta and Value A firm is expected to pay an...

    Chapter 13 Practice Test Question 17 Beta and Value A firm is expected to pay an annual dividend of $.60 next year. After next year the firm's dividends will grow at a steady state rate of 3% per year. You are trying to value the stock and Value Line lists a stock beta of 1.51 while Yahoo is reporting a beta of 1.44. The stock is currently priced at $13.30. If E(RM) - Rf = 4.8% and the risk free...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT