The common stock of Jensen Shipping has an expected return of 17.10 percent. The return on the market is 12 percent and the risk-free rate of return is 4.5. What is the beta of this stock?
options: 1.26 1.68 0.75 1.41 1.52
A stock has an expected return of 12 percent, the risk-free rate is 5.4 percent, and the market risk premium is 5 percent. The beta of this stock must be
options: 2.78 1.10 1.48 1.32 3.44
a.Expected return=risk free rate+beta*(market rate-risk free rate)
17.1=4.5+Beta*(12-4.5)
Beta=(17.1-4.5)/(12-4.5)
=1.68
b.Expected rate=risk free rate+Beta*market risk premium
12=5.4+(5*Beta)
Beta=(12-5.4)/5
=1.32
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