Based on the CAPM, the required rate of return on a stock is 12%, the stock...
Based on the CAPM, the required rate of return on a stock is 12%, the stock is 20 percent more risky than a well-diversified market portfolio. Risk free interest rate is 4% and expected return on the market is 10%. What is the market’s risk premium? What is the stock’s risk premium – in that order? 5%; 6% 5%; 6% 6%; 6% 6%; 5% None of the above
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Based on the CAPM, the required rate of return on a stock is
12%, the stock...
Based on the CAPM, a stock has a required return of 16%. The beta of the...
Based on the CAPM, a stock has a required return of 16%. The beta of the stock is 2.5 and the risk-free rate is 4%. What is the market risk premium? 12% 4.4% 8.8% 6.30% None of the above
What is the CAPM required return of a stock with a beta of 1.2 if the...
What is the CAPM required return of a stock with a beta of 1.2 if the risk-free rate is 1.9% and the expected market risk premium is 5.5%? Answer in percent, rounded to two decimal places. (e.g., 4.32% = 4.32). [Hint: CAPM required return = Risk-free rate + beta x EMRP. Remember order of operations. Multiply beta and EMRP first, then add the risk-free rate]
Problem 3: Calculating a portfolio's beta and CAPM-based expected rate of return Ashley is curious to...
Problem 3: Calculating a portfolio's beta and CAPM-based expected rate of return Ashley is curious to know what her portfolio's CAPM-based expected rate of return should be. After doing some research, she determines that the current market values and betas of each of her 5 stock are as listed below. She is informed by her financial advisor that the risk-free rate is 3% and the market risk premium is 8%. Calculate the expected rate of return on Ashley's portfolio. Stock...
Excel Online Structured Activity: Evaluating risk and return Stock X has a 10.0% expected return, a...
Excel Online Structured Activity: Evaluating risk and return Stock X has a 10.0% expected return, a beta coeficient of 0.9, and a 30% standard deviation of expected returns. Stock Y has a 12.0% expected return, beta coefficient of 1.1, and a 20.0% standard deviation. The risk-free rate is 6%, and the market risk premium is 5%. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions...
5. 14. Using CAPM. A stock has an expected return of 11.4 percent, the risk-free rate...
5. 14. Using CAPM. A stock has an expected return of 11.4 percent, the risk-free rate is 3.7 percent, and the market risk premium is 6.8 percent. What must the beta of this stock be?
EVALUATING RISK AND RETURN Stock X has a 9.5% expected return, a beta coefficient of 0.8,...
EVALUATING RISK AND RETURN Stock X has a 9.5% expected return, a beta coefficient of 0.8, and a 35% standard deviation of expected returns. Stock Y has a 12.5% expected return, a beta coefficient of 1.2, and a 20.0% standard deviation. The risk-free rate is 6%, and the market risk premium is 5%. Calculate each stock's coefficient of variation. Round your answers to two decimal places. Do not round intermediate calculations. CVx = CVy = Which stock is riskier for...
a) If the CAPM is correct, what would be the expected return of a risky asset...
a) If the CAPM is correct, what would be the expected return of a risky asset with a beta of 1.2, given a risk free rate of 3% and an expected market risk premium of 4.5%? b) If the CAPM is correct, what would be the expected return of a risky asset with a beta of 0.8, given a risk free rate of 4% and an expected return of the market of 9%
Calculating Portfolio Betas You own a stock portfolio invested 15 percent in Stock Q, 25 percent...
Calculating Portfolio Betas You own a stock portfolio invested 15 percent in Stock Q, 25 percent in Stock R, 40 percent in Stock S, and 20 percent in Stock T. The betas for these four stocks are . 78, 87, 1.13, and 1.45, respectively. What is the portfolio beta? Calculating Portfolio Betas You own a portfolio equally invested in a risk-free asset and two stocks. If one of the stocks has a beta of 1.29 and the total portfolio is...
EVALUATING RISK AND RETURN Stock X has a 9.5% expected return, a beta coefficient of 0.8,...
EVALUATING RISK AND RETURN Stock X has a 9.5% expected return, a beta coefficient of 0.8, and a 40% standard deviation of expected returns. Stock Y has a 12.5% expected return, a beta coefficient of 1.2, and a 20.0% standard deviation. The risk-free rate is 6%, and the market risk premium is 5%. a. Calculate each stock's coefficient of variation. Round your answers to two decimal places. Do not round intermediate calculations. CVx = ________ CVy = ________ b. Which...
EVALUATING RISK AND RETURN Stock X has a 10.0% expected return, a beta coefficient of 0.9,...
EVALUATING RISK AND RETURN Stock X has a 10.0% expected return, a beta coefficient of 0.9, and a 35% standard deviation of expected returns. Stock Y has a 12.0% expected return, a beta coefficient of 1.1, and a 25.0% standard deviation. The risk-free rate is 6%, and the market risk premium is 5%. a. Calculate each stock's coefficient of variation. Round your answers to two decimal places. Do not round intermediate calculations. CV, - CV- b. Which stock is riskler...
Problem 3: Calculating a portfolio's beta and CAPM-based expected rate of return Ashley is curious to know what her portfolio's CAPM-based expected rate of return should be. After doing some research, she determines that the current market values and betas of each of her 5 stock are as listed below. She is informed by her financial advisor that the risk-free rate is 3% and the market risk premium is 8%. Calculate the expected rate of return on Ashley's portfolio. Stock...
Excel Online Structured Activity: Evaluating risk and return Stock X has a 10.0% expected return, a beta coeficient of 0.9, and a 30% standard deviation of expected returns. Stock Y has a 12.0% expected return, beta coefficient of 1.1, and a 20.0% standard deviation. The risk-free rate is 6%, and the market risk premium is 5%. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions...
5. 14. Using CAPM. A stock has an expected return of 11.4 percent, the risk-free rate is 3.7 percent, and the market risk premium is 6.8 percent. What must the beta of this stock be?
Calculating Portfolio Betas You own a stock portfolio invested 15 percent in Stock Q, 25 percent in Stock R, 40 percent in Stock S, and 20 percent in Stock T. The betas for these four stocks are . 78, 87, 1.13, and 1.45, respectively. What is the portfolio beta? Calculating Portfolio Betas You own a portfolio equally invested in a risk-free asset and two stocks. If one of the stocks has a beta of 1.29 and the total portfolio is...
EVALUATING RISK AND RETURN Stock X has a 10.0% expected return, a beta coefficient of 0.9, and a 35% standard deviation of expected returns. Stock Y has a 12.0% expected return, a beta coefficient of 1.1, and a 25.0% standard deviation. The risk-free rate is 6%, and the market risk premium is 5%. a. Calculate each stock's coefficient of variation. Round your answers to two decimal places. Do not round intermediate calculations. CV, - CV- b. Which stock is riskler...
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