A stock has a required return of 9%, the risk-free rate is 3%, and the market risk premium is 5%.
REQUIRED RETURN = Rf + beta(Rm-Rf)
REQUIRED RETURN = 9%, Rm-Rf = RISK PREMIUM = 5%, Rf = RISK FREE RATE = 3%
9% = 3% + beta(5%)
6% = beta(5%)
(a) : beta = 1.2
NOW IF MARKET RISK PREMIUM = 9%
(b)
V. If the stock's beta is greater than 1.0, then the change in required rate of return will be greater than the change in the market risk premium.
NEW STOCK'S REQUIRED RETURN = 3% + 1.2(9%) =13.8% (Thumbs up please)
A stock has a required return of 9%, the risk-free rate is 3%, and the market...
A stock has a required return of 14%, the risk-free rate is 3%, and the market risk premium is 6%. What is the stock's beta? Round your answer to two decimal places. If the market risk premium increased to 8%, what would happen to the stock's required rate of return? Assume that the risk-free rate and the beta remain unchanged. Do not round intermediate calculations. Round your answer to two decimal places. If the stock's beta is equal to 1.0,...
1) A stock has a required return of 9%, the risk-free rate is 3.5%, and the market risk premium is 3%. What is the stock's beta? Round your answer to two decimal places. ____ 2)If the market risk premium increased to 6%, what would happen to the stock's required rate of return? Assume that the risk-free rate and the beta remain unchanged. Do not round intermediate calculations. Round your answer to two decimal places. A)If the stock's beta is less...
A stock has a required return of 9%, the risk-free rate is 3.5%, and the market risk premium is 4%. What is the stock's beta? Round your answer to two decimal places. ______ If the market risk premium increased to 6%, what would happen to the stock's required rate of return? Assume that the risk-free rate and the beta remain unchanged. Do not round intermediate calculations. Round your answer to two decimal places. If the stock's beta is equal to...
A stock has a required return of 14%, the risk-free rate is 5.5%, and the market risk premium is 4%. What is the stock's beta? Round your answer to two decimal places. If the market risk premium increased to 7%, what would happen to the stock's required rate of return? Assume that the risk-free rate and the beta remain unchanged. Do not round intermediate calculations. Round your answer to two decimal places. If the stock's beta is equal to 1.0,...
A stock has a required return of 11%, the risk-free rate is 6.5%, and the market risk premium is 2%. What is the stock's beta? Round your answer to two decimal places. If the market risk premium increased to 4%, what would happen to the stock's required rate of return? Assume that the risk-free rate and the beta remain unchanged. Do not round intermediate calculations. Round your answer to two decimal places. If the stock's beta is equal to 1.0,...
A stock has a required return of 10%, the risk-free rate is 7.5%, and the market risk premium is 2%. a. What is the stock's beta? Round your answer to two decimal places. b. If the market risk premium increased to 6%, what would happen to the stock's required rate of return? Assume that the risk-free rate and the beta remain unchanged. Do not round intermediate calculations. Round your answer to two decimal places. I. If the stock's beta is...
A stock has a required return of 13%, the risk-free rate is 4.5%, and the market risk premium is 3%. a. What is the stock's beta? Round your answer to two decimal places. b. If the market risk premium increased to 6%, what would happen to the stock's required rate of return? Assume that the risk-free rate and the beta remain unchanged. Do not round intermediate calculations. Round your answer to two decimal places. 1. If the stock's beta is...
Beta and required rate of return A stock has a required return of 16%; the risk-free rate is 6.5%; and the market risk premium is 6%. What is the stock's beta? Round your answer to two decimal places. If the market risk premium increased to 10%, what would happen to the stock's required rate of return? Assume that the risk-free rate and the beta remain unchanged. If the stock's beta is greater than 1.0, then the change in required rate...
Beta and required rate of return A stock has a required return of 13%; the risk-free rate is 3%; and the market risk premium is 3%. What is the stock's beta? Round your answer to two decimal places. If the market risk premium increased to 10%, what would happen to the stock's required rate of return? Assume that the risk-free rate and the beta remain unchanged. If the stock's beta is equal to 1.0, then the change in required rate...
8.5 A stock has a required return of 13%, the risk-free rate is 3.5%, and the market risk premium is 4%. a. What is the stock's beta? Round your answer to two decimal places. b. If the market risk premium increased to 5%, what would happen to the stock's required rate of return? Assume that the risk-free rate and the beta remain unchanged. Do not round intermediate calculations. Round your answer to two decimal places. I. If the stock's beta...