Elba Eateries' stock has a beta of 0.70. Assume that the risk-free rate, rRF, is 5.5%...
Elba Eateries' stock has a beta of 0.70. Assume that the risk-free rate, rRF, is 5.5% and the market risk premium, (rM – rRF), equals 4%.
Compute the required rate of return for Elba Eateries. Respond in percentage form without the percent sign and round to the second decimal place
Homework Answers
Required rate of return = rRF + Beta * (rm - rRF)
= 5.5% + 0.7 * 4%
Required rate of return = 5.5% + 2.8%
Required rate of return for Elba Eateries = 8.3% = 8.30
Add Answer to:
Elba Eateries' stock has a beta of 0.70. Assume that the
risk-free rate, rRF, is 5.5%...
Question 1: Cooley Company's stock has a beta (b) of 1.28, the risk-free rate (rRF) is...
Question 1: Cooley Company's stock has a beta (b) of 1.28, the risk-free rate (rRF) is 1.25%, and the market risk premium (RPM) is 5.50%. a. What does the beta measure? Give a short answer in 1 sentence. b. What is market risk premium? Give a short answer in 1 sentence. c. Calculate the firm's required rate of return? Show the step-by-step calculation and circle your answer. (Hint: Required return = rRF + b(RPM)) Question 2: Consider the following information...
Question 1: Cooley Company's stock has a beta (b) of 1.28, the risk-free rate (rRF) is...
Question 1: Cooley Company's stock has a beta (b) of 1.28, the risk-free rate (rRF) is 1.25%, and the market risk premium (RPM) is 5.50%. a. What does the beta measure? Give a short answer in 1 sentence. b. What is market risk premium? Give a short answer in 1 sentence. c. Calculate the firm's required rate of return? Show the step-by-step calculation and circle your answer. (Hint: Required return = rRF + b(RPM)) Question 2: Consider the following information...
please answer all parts 1)Assume that the risk-free rate is 5.5% and the required return on the market is 8%. What is t...
please answer all parts 1)Assume that the risk-free rate is 5.5% and the required return on the market is 8%. What is the required rate of return on a stock with a beta of 3? Round your answer to two decimal places. _____% 2)Assume that the risk-free rate is 3.5% and the market risk premium is 5%. What is the required return for the overall stock market? Round your answer to one decimal place. ______% 3)What is the required rate...
A stock has a required return of 14%, the risk-free rate is 5.5%, and the market...
A stock has a required return of 14%, the risk-free rate is 5.5%, and the market risk premium is 4%. What is the stock's beta? Round your answer to two decimal places. If the market risk premium increased to 7%, 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. If the stock's beta is equal to 1.0,...
A stock has an expected return of 9%, the risk-free rate is 5.5%, and the market...
A stock has an expected return of 9%, the risk-free rate is 5.5%, and the market risk premium is 3.0%. What must the beta of this stock be? Round to the FIRST decimal point
Sheridan Industries common stock has a beta of 1.2. If the market risk-free rate is 5.2...
Sheridan Industries common stock has a beta of 1.2. If the
market risk-free rate is 5.2 percent and the expected return on the
market is 8.2 percent, what is Sheridan’s cost of common stock?
I solved this problem incorrectly by doing
Kes=Rrf+(Betaesx market risk
premium)
Kes=0.052+(1.2x0.082)
Kes=0.052+0.098400
Kes=0.1504=15.0%
I'm not sure what I am doing wrong. Please show full
calculation.
X Your answer is incorrect. Sheridan Industries common stock has a beta of 1.2. If the market risk-free rate is...
A stock has an expected return of 9%. What is its beta? Assume the risk-free rate...
A stock has an expected return of 9%. What is its beta? Assume
the risk-free rate is 6% and the expected rate of return on the
market is 12%. (Negative value should be indicated by a
minus sign. Round your answer to 2 decimal places.)
Problem 7-23 A stock has an expected return of 9%. What is its beta? Assume the risk-free rate is 6% and the expected rate of return on the market is 12%. (Negative value should be...
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 o...
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.
1. You are analyzing a common stock with a beta of 1.5. The risk-free rate of...
1. You are analyzing a common stock with a beta of 1.5. The risk-free rate of interest is 5 percent and the expected return on the market is 15 percent. If the stock's return based on its market price is 21.5%, the stock is overvalued since the expected return is above the SML. the stock is undervalued since the expected return is above the SML. the stock is correctly valued since the expected return is above the SML. the stock...
A stock has an expected return of 13.2 percent, the risk-free rate is 6 percent, and...
A stock has an expected return of 13.2 percent, the risk-free rate is 6 percent, and the market risk premium is 10 percent. What must the beta of this stock be? (Do not round intermediate calculations. Round your answer to minimum 2 decimal places, e.g., 32.16.) ______ Hint: Solve for beta from the formula ER = RF + BETA x (RM - RF) where MRP=RM-RF
Sheridan Industries common stock has a beta of 1.2. If the
market risk-free rate is 5.2 percent and the expected return on the
market is 8.2 percent, what is Sheridan’s cost of common stock?
I solved this problem incorrectly by doing
Kes=Rrf+(Betaesx market risk
premium)
Kes=0.052+(1.2x0.082)
Kes=0.052+0.098400
Kes=0.1504=15.0%
I'm not sure what I am doing wrong. Please show full
calculation.
X Your answer is incorrect. Sheridan Industries common stock has a beta of 1.2. If the market risk-free rate is...
A stock has an expected return of 9%. What is its beta? Assume
the risk-free rate is 6% and the expected rate of return on the
market is 12%. (Negative value should be indicated by a
minus sign. Round your answer to 2 decimal places.)
Problem 7-23 A stock has an expected return of 9%. What is its beta? Assume the risk-free rate is 6% and the expected rate of return on the market is 12%. (Negative value should be...
Most questions answered within 3 hours.
-
In Python,
Write a complete program to input up to a maximum of 25
characters into...
asked 2 minutes ago -
A ship sailing in the sea enters a wide and deep
River. The density of seawater...
asked 5 minutes ago -
Solve it in Python
4. An alternade is a word in which its letters, taken
alternatively...
asked 23 minutes ago -
Assume that the company sells two products, X and Y, with
contribution margins per unit of...
asked 23 minutes ago -
The International Nanny Association (INA) reports that in a
sample of 928 in- home child care...
asked 55 minutes ago -
Consider the following data:
x
−6−6
−5−5
−4−4
−3−3
−2−2
P(X=x)P(X=x)
0.20.2
0.20.2
0.20.2
0.20.2
0.20.2...
asked 37 minutes ago -
A uniform disk with mass 35.2 kg and radius 0.230 mis pivoted at
its center about...
asked 23 minutes ago -
Gustin Corp manufactures, sells, and leases medical equipment.
Gustin Corp agrees to lease 3 CAT scanners,...
asked 28 minutes ago -
Describe the origin of the cardiac contraction signal and the
pathway it follows through the heart.
asked 37 minutes ago -
Find the area under the standard normal curve to the left of
z
= -1.22 ....
asked 48 minutes ago -
an afro-carribean family is seeking psychotherapeutic help
because they are concerned about their son, Trevor, is...
asked 49 minutes ago -
In Wealth of Nations, how does Smith introduce the reader to the
central concept of the...
asked 51 minutes ago