Beta = 1.38, Risk-Free Rate = 3.87%, Rate of Inflation = 3.93%, Market Risk Premium =...

Question

Question

Beta = 1.38, Risk-Free Rate = 3.87%, Rate of Inflation = 3.93%, Market Risk Premium = 9.03%. What is the expected rate of return?

Answer 1

Answer #1

Expected rate of return Rf+IP+Beta*(Rm-Rf) 0.0387+0.0393+1.38*(0.0903) 0.202614 20.26% Rf Risk free rate Rm-Rf Market premium

Answer 2

Similar Homework Help Questions

help needed asap, with steps plz If the market premium is 7.01 percent, the risk-free rate...

help needed asap, with steps plz If the market premium is 7.01 percent, the risk-free rate is 3.93 percent, the inflation rate is 1.18 percent, and Middlefield Motors common stock has a beta of 0.73, then what is the expected return for Middlefield Motors stock? Answer as a rate in decimal format so that 12.34% would be entered as 1234 and 0.98% would be entered as .0098. Number
If you know the risk-free rate, the market risk-premium, and the beta of a stock, then...

If you know the risk-free rate, the market risk-premium, and the beta of a stock, then using the Capital Asset Pricing Model (CAPM) you will be able to calculate the expected rate of return for the stock. True False
Asset A has a CAPM beta of 1.5. The covariance between asset A and asset B is 0.13. If the risk-free rate is 0.05, the expected market risk premium is 0.07, and the market risk premium has a standard...

Asset A has a CAPM beta of 1.5. The covariance between asset A and asset B is 0.13. If the risk-free rate is 0.05, the expected market risk premium is 0.07, and the market risk premium has a standard deviation of 25%, then what is asset B's expected return under the CAPM? Asset A has a CAPM beta of 1.5. The covariance between asset A and asset B is 0.13. If the risk-free rate is 0.05, the expected market risk...

e. The risk-free rate on long-term Treasury bonds is 6.04%. Assume that the market risk premium...

e. The risk-free rate on long-term Treasury bonds is 6.04%. Assume that the market risk premium is 5%. What is the expected return on the market? Now use the SML equation to calculate the two companies' required returns. Market risk premium (RPM) = 5.000% Risk-free rate = 6.040% Expected return on market = Risk-free rate + Market risk premium = 6.040% + 5.000% = 11.040% Required return = Risk-free rate + Market Risk Premium x Beta Goodman: Required return =...
1: Assume that the risk-free rate is 4.5% and the market risk premium is 4%. What...

1: Assume that the risk-free rate is 4.5% and the market risk premium is 4%. What is the required return for the overall stock market? Round your answer to two decimal places. % What is the required rate of return on a stock with a beta of 0.6? Round your answer to two decimal places. % 2: A stock has a required return of 16%; the risk-free rate is 3%; and the market risk premium is 6%. What is the...
The risk-free rate of return is 2.8 percent and the market risk premium is 7.1 percent....

The risk-free rate of return is 2.8 percent and the market risk premium is 7.1 percent. What is the expected rate of return on a stock with a beta of 0.98?

The risk-free rate of return is 2.5 percent, and the market risk premium is 11 percent....

The risk-free rate of return is 2.5 percent, and the market risk premium is 11 percent. What is the expected rate of return on a stock with a beta of 1.8?
The risk-free rate of return is 3.68 percent and the market risk premium is 7.84 percent....

The risk-free rate of return is 3.68 percent and the market risk premium is 7.84 percent. What is the expected rate of return on a stock with a beta of 1.32?
Required return on Stock = Risk-free return + (Market risk premium)(Stock's beta) to compensate the investor...

Required return on Stock = Risk-free return + (Market risk premium)(Stock's beta) to compensate the investor for risk. If a stock's expected return plots below the SM If a stock's expected return plots on or above the SML, then the stock's return is -Select- the stock's return is -Select- to compensate the investor for risk. The SML line can change due to expected inflation and risk aversion. If inflation changes, then the SML plotted on a graph will shift up...

Answer the following questions Suppose that beta for a given stock is the same as market beta. The risk-free rate is 2%....

Answer the following questions Suppose that beta for a given stock is the same as market beta. The risk-free rate is 2%. What is the expected return for this stock if the expected market return is 10%? What is the expected return for this stock if the market risk premium is 10%?