required return=risk-free rate +Beta*(market rate- risk-free rate)
required return for:
Ford=1+(8-1)*1.5=11.5%
Tesla=1+(8-1)*0.4=3.8%
Hence difference=11.5%-3.8%
=7.7%
1. The stock of Ford has a beta of 1.5, and the stock of Tesla has...
5. The stock of Ford has a beta of 1.5. and the stock of Tesla has a beta of 0.4. The expected rate of return on the market is 8 percent, and the risk free rate is 1 percent. By how much does the required return on Ford exceed the required return on Tesla? (CAPM)
5. The stock of Ford has a beta of 1.5, and the stock o expected rate of return on the market is 8 percent, and how much does the required return on Ford exceed (CAPM) required remarket is 8 peto stock of Tesla has a beta of 0.4.cent. By d the risk free rate is 1 percent. aceed the required return on te return on Tesla?
Stock R has a beta of 1.5,Stock S has a beta of 0.75, the expected rate of return on an average stock is 13 percent, and the risk-free rate of return is 7 percent. By how much does the required return on the riskier stock exceed the required return on the less risky stock?
8.9/8.10 Stock R has a beta of 2.5, Stock S has a beta of 0.55, the required return on an average stock is 9%, and the risk-free rate of return is 4%. 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. Beale Manufacturing Company has a beta of 1.4, and Foley Industries has a beta of 0.70. The required return on an...
Stock R has a beta of 2.2, Stock S has a beta of 0.4, the required return on an average stock is 11%, 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.
1:Stock R has a beta of 2.5, Stock S has a beta of 0.95, the required return on an average stock is 11%, 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. % 2:Beale Manufacturing Company has a beta of 2, and Foley Industries has a beta of 0.35. The required return on an...
answer a & b please Use the following information. Stock X has a beta of 1.5. The risk-free rate of return is 4%. The market risk premium is 11%. a) Find the market return (or market portfolio's rate of return). b) Find the required rate of return on Stock Xusing the CAPM.
5. Suppose the current risk-free rate is 7.7 percent. Potpourri Inc. stock has a beta of 1.5 and an expected return of 16.7 percent. (Assume the CAPM is true.) (A) Calculate the risk premium on the market. has a beta of 0.8. on the Magnolia (B) Magnolia Industries stock Calculate the expected stock. return Suppose you have invested. $10,000 in Potpourri and Magnolia, and the beta of the portfolio is 1.255. invest in each stock? a combined total of (C)...
Pt 1. If a stock has a market beta greater than 1, the expected return will be less than the expected return of market portfolio. Pt. 2 The stock of Target Corporation has a return of 36.43. The market risk premium is 16.94 percent and the risk-free rate is 8.04 percent. What is the beta on this stock? Use the CAPM Equation
QUESTION 3 "Assume that Tesla common stock has a Beta of 1.2, the risk-free rate of interest is 3% and the market risk premium is 5%. According to the CAPM, what should be Investors required rate of return for Tesla stock? 9.00% 9.20 % 5.40% 15.20 % 12.60% QUESTION 4 "You expect Caterpillar will pay dividends of 2.25 in one year, 2.50 in two years, and 2.75 in three years. From that point onwards, dividends will grow at 7% per...