I hope that the solution is complete and clear and the drawing Be in numbers and clear
a) Risk free rate Rf = | 2.00% | |
The risk-free rate or beta of zero is located at the y- intercept. | ||
b) Market Risk Premium = Expected Market Return - Rf = 8% -2% = | 6.00% | |
The rate of return or beta of one is located at the X- intercept less risk free rate | ||
c) HC's Beta | 1 | |
d) HC's required rate of return = | 8.00% | given |
2) | ||
Required Rate of Return = Rf + Beta x (Rm - Rf) | ||
Required Rate of Return = (2% + 3%+ 1 x 6%) | 11.00% | |
The risk-free rate consists of two elements: a real risk-free rate of return and an in?ation premium. Under the conditions given above, the real risk-free rate does not change, the rate of in?ation increases by 3.0%, and the market risk premium (MRP) remains unchanged. | ||
3) | ||
The flatter the slope of the SML, the lower the level of risk aversion | ||
4) | ||
The SML would plot as a horizontal line. | ||
If investors were not at all risk averse, there would be no risk premium. In that case, the SML would plot as a horizontal line |
I hope that the solution is complete and clear and the drawing Be in numbers and...
Assignment 08 - Risk and Rates of Return The following graph plots the current security market line (SML) and indicates the return that investors require from holding stock from Happy Corp. (HC). Based on the graph, complete the table that follows. REQUIRED RATE OF RETURN Percent 20.0 Return on HC's Stock RISK (Betal Value CAPM Elements Risk-free rate (r) Market risk premium (RPM) Happy Corp. stock's beta Required rate of return on Happy Corp. stock 1.1% 2.2% 8.0% 2.096 We...
4. Changes to the security market line The following graph plots the current security market line (SML) and indicates the return that investors require from holding stock from Happy Corp. (HC). Based on the graph, complete the table that follows. REQUIRED RATE OF RETURN (Percenti 20.0 16.0 Return on HC's Stock 12.0 8.0 4.0 0.0 0.5 10 1.5 2.0 RISK (Betal CAPM Elements Value Risk-free rate (rar) Market risk premium (RPe) Happy Corp. stock's beta Required rate of return on...
The following graph plots the current security market line (SML) and indicates the return that investors require from holding stock from Happy Corp. (HC). Based on the graph, complete the table that follows. REQUIRED RATE OF RETURN (Percent) 20.0 16.0 12.0 Return on HC's Stock 8.0 4.0 0.0 0.5 1.0 1.5 2.0 RISK (Betal CAPM Elements Value Risk-free rate (FRF) 4.0% Market risk premium (RPM) 4.4% Happy Corp. stock's beta 2.2% Required rate of return on 7.6% Happy Corp. stock...
The following graph plots the current security market line (SML) and indicates the return that investors require from holding stock from Happy Corp. (HC). Based on the graph, complete the table that follows. REQUIRED RATE OF RETURN (Percent] 20.0 16.0 12.0 Return on HC's Stock 8.0 4.0 0.5 1.0 1.5 2.0 RISK (Betal 0.0 CAPM Elements Value Risk-free rate (RF) Market risk premium (RPM) Happy Corp. stock's beta Required rate of return on Happy Corp. stock An analyst believes that...
11. Changes to the security market line The following graph plots the current security market line (SML) and indicates the return that investors require from holding stock from Happy Corp. (HC). Based on the graph, complete the table that follows: REQUIRED RATE OF RETURN (Percent) Rotum on HC's Stock RISK (Beta) Ch 08: Assignment - Risk and Rates of Return Value CAPM Elements Risk-free rate (TRF) Market risk premium (RPM) Happy Corp. stock's beta Required rate of return on Happy...
Assignment 08 - Risk and Rates of Return 8. Changes to the security market line The following graph plots the current security market line (SML) and indicates the return that investors require from Molding stock from Happy Corp. (HC). Based on the graph, complete the table that follows REQUIRED RATE OF RETURN Percent Returns RISK (Betal CAPM Elements Value Risk-free rate( ) Market risk premium (RPM) Happy Corp. stock's beta Required rate of retum on Happy Corp. stock An analyst...
The following graph plots the current security market line (SML) and indicates the return that investors require from holding stock from Happy Corp. (HC). Based on the graph, complete the table that follows. REQUIRED RATE OF RETURN IPercent) 20.0 16.0 12.0 Return on HC's Stock 8.0 4.0 2.0 1,0 1.5 0.5 0.0 RISK 1Betal Value CAPM Elements Risk-free rate (rR) Market risk premium (RPM) Happy Corp. stock's beta Required rate of return on Happy Corp, stock ssets An analyst believes...
need help doing the New SML line on the graph
Ch 08: Assignment - Risk and Rates of Return The following graph plots the current security market line (SML) and indicates the return that investors require from holding stock from Happy Corp. (HC). Based on the graph, complete the table that follows: REQURED RATE OF RETURN(Percent) m elum on HC's Stock RISK (Beta) Value 2.09 CAPM Elements Risk-free rate ( ) Market risk premium (RPM) Happy Corp. stock's beta Required...
Ch 08: Assignment-Risk and Rates of Return 8. Changes to the security market line The following graph plots the current security market line (SML) and indicates the return that investors require from holding stock from Happy Corp. (HC). Based on the graph, complete the table that follows. REQUIRED RATE OF RETURN (Percent) Return on HC's Stock RISK (Beta) Value CAPM Elements Risk-free rate (rry) Market risk premium (RPM) Value CAPM Elements Risk free rate (TRE) Market risk premium (RPM) Happy...
8. Changes to the security market line Aa Aa E The following graph plots the current security market line (SML) and indicates the return that investors require from holding stock from Happy Corp. (HC). Based on the graph, complete the table that follows. REQUIRED RATE OF RETURN (Percent) Return on HC's Stock 0.0 0.5 1.0 1.5 2.0 RISK (Beta) Value CAPM Elements Risk-free rate (TRF) Market risk premium (RPM) Happy Corp. stock's beta Required rate of return on Happy Corp....