Magee's Required rate as per CAPM method =Risk Free Rate+
Beta*(Market return-Risk Free rate) =4.50%+1.20*5% =10.50%
Option a is correct option
Magee Company's stock has a beta of 1.20, the risk-free rate is 4.50%, and the market...
Moerdyk Company's stock has a beta of 1.5, the risk-free rate (rRFR) is 4.50%, and the market risk premium (rM- rRFR) is 7.50%. What is the firm's required rate of return? 11.36% 15.75% 15.95% 14.50% 13.55%
15. Newsome's stock has a beta of 1.20, Its required return is 11.50%, and the risk-free rate the required rate of return on the market? (Hint: First find the market risk premium.) a. 10.30% b. 10.62% c. 10.88% d. 10.15% e. 11.43% d return is 11.50%, and the risk-free rate is 4.30%. What is VRP
Suppose that the common stock of Monserrate International has a beta of 1.20, the risk-free rate is 3.0 percent, and the market risk premium is 8.0 percent. The yield to maturity on the firm's bonds is 7.0 percent. The weights of debt and equity in the capital structure are 40% and 60%, respectively. What is the WACC if the tax rate is 21 percent and all interest is tax deductible? . .... 10.51% 10.51% O 8.43% 9.77% .... 11.25% 7.16%
Cooley Company's stock has a beta of 0.60, the risk-free rate is 2.25%, and the market risk premium is 5.50%. What is the firm's required rate of return? Do not round your intermediate calculations. 5.55% 4.38% 6.60% 6.16% 4.66%
Bill Company's stock has a beta of 1.40, the risk-free rate is 4.25 required rate of return? % , and the market risk premium is 6.50 %. What is Bill's 11.36 % 11.65% 11.95% 12.25% 13.35%
ABC Company's stock has a beta of 1.95, the risk-free rate is 2.25%, and the market risk premium is 6.75%. What is ABC's required rate of return using CAPM? Enter your answer rounded to two decimal places. Do not enter % in the answer box. For example, if your answer is 0.12345 or 12.345% then enter as 12.35 in the answer box. Ripken Iron Works believes the following probability distribution exists for its stock. What is the standard deviation of...
If the current risk-free rate is 6%; Stock A has a beta of 1.0; Stock B has a beta of 2.0; and the market risk premium, r M – r RF, is positive. Which of the following statements is CORRECT? a. If the risk-free rate increases but the market risk premium stays unchanged, Stock B's required return will increase by more than Stock A's. b. If Stock B's required return is 11%, then the market risk premium is 2.5%. c....
A stock has a beta of 1.20, the market premium is 13.0%, and the risk-free rate is 1.0%. What must the expected return on this stock be? ENTER YOUR ANSWER AS A PERCENTAGE WITH ONE DECIMAL PLACE (e.g., 12.1) AND NOT AS A DECIMAL (e.g., 0.121). ROUND TO THE NEAREST TENTH OF A PERCENT.
Homework Help! You are analyzing a stock that has a beta of 1.20. The risk-free rate is 5.0% and you estimate the market risk premium to be 6.0%. If you expect the stock to have a return of 11.0% over the next year, should you buy it? Why or why not? The expected return according to the CAPM is %. (Round to two decimal places.) Should you buy the stock? (Select the best choice below.) O A. No, because the...
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...