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QUESTION 28 The current risk-free rate of return in the economy is 6%. In addition, the...
TOISRULIUSS. Expected Return = Risk free Rate + beta (expected market return - risk free rate)...
TOISRULIUSS. Expected Return = Risk free Rate + beta (expected market return - risk free rate) .04 +0.80.09 - .04) = .08 = 8.0% 3. Suppose the MiniCD Corporation's common stock has a return of 12%. Assume the risk- free rate is 4%, the expected market return is 9%, and no unsystematic influence affected Mini's return. The beta for MiniCD is:
The common stock of Flavorful Teas has a beta of 48. The risk-free rate of return...
The common stock of Flavorful Teas has a beta of 48. The risk-free rate of return is 2.5 percent. The return on the market is 12 percent and. What is the expected return on this stock? If the Market risk premium is 8.5%, what is the expected return on this stock? ABC Corp just paid a dividend of $1.5 per share. The dividend is expected to grow at 4% a year indefinitely. If the required rate of return is 8.5%,...
Assume that the risk-free rate of interest is 6% and the expected rate of return on...
Assume that the risk-free rate of interest is 6% and the expected rate of return on the market is 12%. A stock has an expected rate of return of 7%. What is its beta? (Negative value should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places.) Beta
Determine the expected return of a company's stock given a risk free rate of 7%, an...
Determine the expected return of a company's stock given a risk free rate of 7%, an expected market return of 12%, a market risk premium of 5% and a company Beta of 1.5. O 0.115 O 0.125 O 0.135 O 0.145 Which of the following is NOT a cost to the firm of increasing debt financing? the cost of common equity will decrease. Ostockholders will demand a higher return. investors will demand a higher interest rate on debt. the risk...
eBook Problem 11-06 The risk-free rate of return is 1 percent, and the expected return on...
eBook Problem 11-06 The risk-free rate of return is 1 percent, and the expected return on the market is 7.1 percent. Stock A has a beta coefficient of 1.4, an earnings and dividend growth rate of 6 percent, and a current dividend of $3.50 a share. Do not round intermediate calculations. Round your answers to the nearest cent. .. What should be the market price of the stock? $ b. If the current market price of the stock is $119.00,...
The risk-free rate of return is 3.7 percent. The risk premium on the market portfolio is...
The risk-free rate of return is 3.7 percent. The risk premium on the market portfolio is 8.8 percent. The table below has information on 5 stocks. Can you figure out which one of them is correctly priced (.e., correctly compensates investors for the amount of systematic risk they are facing)? Stock Beta | #1 #2 Expected Return 9.47% 12.03 14.44 15.80 18.37 0.64 0.97 1.22 1.37 1.68 #3 #4 Multiple Choice O O O Multiple Choice Ο Ο Ο Ο...
The risk free rate on Treasury bill is 2%. The annual rate of return onn the...
The risk free rate on Treasury bill is 2%. The annual rate of return onn the DowJones market index is 7%. You are considering a stock with a beta that is 30% more volatile than the overall market beta. What is the minimum level of annual return that you would require on this investment? Choose one of the following A) 5.5% B) 2% C) 8.5% D) 6.5% E) 5%
Suppose that currently the risk free rate of interest, Rf, is 2%, the expected rate of...
Suppose that currently the risk free rate of interest, Rf, is 2%, the expected rate of return on the market portfolio, Rm, is 9% and beta of the common stock of Northern Mines Ltd. is 2.5. Calculate the current cost of equity capital, denoted by ke, to Northern Mines Ltd.
Consider the CAPM. The risk-free rate is 5%, and the expected return on the market is...
Consider the CAPM. The risk-free rate is 5%, and the expected return on the market is 17%. What is the expected return on a stock with a beta of 1.5? A. 31% B. 28% C. 13% D. 23%
8.5 A stock has a required return of 13%, the risk-free rate is 3.5%, and the...
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...
TOISRULIUSS. Expected Return = Risk free Rate + beta (expected market return - risk free rate) .04 +0.80.09 - .04) = .08 = 8.0% 3. Suppose the MiniCD Corporation's common stock has a return of 12%. Assume the risk- free rate is 4%, the expected market return is 9%, and no unsystematic influence affected Mini's return. The beta for MiniCD is:
Assume that the risk-free rate of interest is 6% and the expected rate of return on the market is 12%. A stock has an expected rate of return of 7%. What is its beta? (Negative value should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places.) Beta
Determine the expected return of a company's stock given a risk free rate of 7%, an expected market return of 12%, a market risk premium of 5% and a company Beta of 1.5. O 0.115 O 0.125 O 0.135 O 0.145 Which of the following is NOT a cost to the firm of increasing debt financing? the cost of common equity will decrease. Ostockholders will demand a higher return. investors will demand a higher interest rate on debt. the risk...
eBook Problem 11-06 The risk-free rate of return is 1 percent, and the expected return on the market is 7.1 percent. Stock A has a beta coefficient of 1.4, an earnings and dividend growth rate of 6 percent, and a current dividend of $3.50 a share. Do not round intermediate calculations. Round your answers to the nearest cent. .. What should be the market price of the stock? $ b. If the current market price of the stock is $119.00,...
The risk-free rate of return is 3.7 percent. The risk premium on the market portfolio is 8.8 percent. The table below has information on 5 stocks. Can you figure out which one of them is correctly priced (.e., correctly compensates investors for the amount of systematic risk they are facing)? Stock Beta | #1 #2 Expected Return 9.47% 12.03 14.44 15.80 18.37 0.64 0.97 1.22 1.37 1.68 #3 #4 Multiple Choice O O O Multiple Choice Ο Ο Ο Ο...
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...
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