A stock has a beta of 1.4, the market expected return is 7%, and the riskfree...

Question

Question

A stock has a beta of 1.4, the market expected return is 7%, and the riskfree rate is 3%.

What is the expected rate of return according to CAPM?

Express your answer as a percentage; for example, 3.18% should be entered as 3.18 without the percentage sign.

Answer 1

Answer #1

Expected return = Rf + Beta x(market return-Rf) 8.60% 0.03+(1.4*0.07-0.03))

Answer 2

Similar Homework Help Questions

Question 6 (1 point) A stock has a beta of 2.4, the market expected return is...

Question 6 (1 point) A stock has a beta of 2.4, the market expected return is 8% and the riskfree rate is 2%. What is the expected rate of return according to CAPM? Express your answer as a percentage, for example 3.18% should be entered as 3.18 without the percentage sign. Your Answer: Answer Question 7 (1 point) Suppose the covariance between the returns of the stock GHI and the returns to the market is 0.00064 and the standard deviation...
A stock has a beta of 0.7. Suppose the expected market return is 8% and the...

A stock has a beta of 0.7. Suppose the expected market return is 8% and the risk-free rate is 2%. What is this stock's expected return according to the CAPM? Answer in percent, rounded to one decimal place.
A stock has a beta of 0.7. Suppose the expected market return is 8% and the...

A stock has a beta of 0.7. Suppose the expected market return is 8% and the risk-free rate is 2%. What is this stock's expected return according to the CAPM? Answer in percent, rounded to one decimal place. (e.g., 8.32% = 8.3)

A stock has a beta of 0.7. Suppose the expected market return is 8% and the...

A stock has a beta of 0.7. Suppose the expected market return is 8% and the risk-free rate is 2%. What is this stock's expected return according to the CAPM? Answer in percent, rounded to one decimal place. (e.g., 8.32% = 8.3)
A stock has a beta of 0.7. Suppose the expected market return is 8% and the...

A stock has a beta of 0.7. Suppose the expected market return is 8% and the risk-free rate is 2%. What is this stock's expected return according to the CAPM? Answer in percent, rounded to one decimal place. (e.g., 8.32% = 8.3)
a. Compute the expected rate of return for Intel common stock, which has a 1.4 beta. The risk-free rate is 3 percent...

a. Compute the expected rate of return for Intel common stock, which has a 1.4 beta. The risk-free rate is 3 percent and the market portfolio (composed of New York Stock Exchange stocks) has an expected return of 12 percent. b. Why is the rate you computed the expected rate? P8-13 (similar to) Question Help (Expected rate of return using CAPM) a. Compute the expected rate of return for Intel common stock, which has a 1.4 beta. The risk-free rate...

Stock Y has a beta of 1.4 and an expected return of 13 percent. Stock Z...

Stock Y has a beta of 1.4 and an expected return of 13 percent. Stock Z has a beta of 0.85 and an expected return of 10.4 percent. Required: What would the risk-free rate have to be for the two stocks to be correctly priced relative to each other? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).) Risk-free rate %
Stock A has a beta of 1.1 and an expected return of 10.2%, Stock B has...

Stock A has a beta of 1.1 and an expected return of 10.2%, Stock B has a beta of 1.4 and an expected return of 12.0%. If the risk-free rate is 3% and the market risk premium is 7%, which should you add to a portfolio with a beta of 0.8? a. Stock A b. Stock B c. Both d. Neither
tock Y has a beta of 1.4 and an expected return of 17 percent. Stock Z...

tock Y has a beta of 1.4 and an expected return of 17 percent. Stock Z has a beta of .7 and an expected return of 10.1 percent. If the risk-free rate is 6 percent and the market risk premium is 7.2 percent, the reward-to-risk and ratios for Stocks Y and Z are percent, respectively. Since the SML reward-to-risk is percent, Stock Y is and Stock Z is (Do not round intermediate calculations and enter your answers as a percent...

A stock has an expected return of 9%. What is its beta? Assume the risk-free rate...

A stock has an expected return of 9%. What is its beta? Assume the risk-free rate is 6% and the expected rate of return on the market is 12%. (Negative value should be indicated by a minus sign. Round your answer to 2 decimal places.) Problem 7-23 A stock has an expected return of 9%. What is its beta? Assume the risk-free rate is 6% and the expected rate of return on the market is 12%. (Negative value should be...