Financial market
7.
The expected risk premium on a stock is equal to the expected return on the stock minus the:
Group of answer choices
inflation rate.
expected market rate of return.
standard deviation.
risk-free rate.
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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? Group of answer choices 23.7 22.3 14.7 19.1
If the CAPM is used to estimate the cost of equity capital, the expected excess market...
If the CAPM is used to estimate the cost of equity capital, the expected excess market return is equal to the: A. difference between the return on the market and the risk-free rate. B. beta times the market risk premium. C. market rate of return. D. beta times the risk-free rate. E. return on the stock minus the risk-free rate.
The formula for computing the risk premium is the: The formula for computing the risk premium...
The formula for computing the risk premium is the: The formula for computing the risk premium is the: a. security's return plus the risk-free rate. b. expected return plus the risk-free rate. c. security's return minus the market rate. d. market rate minus the inflation rate. e. expected return minus the risk-free rate.
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...
Consider the following information about three stocks: a. If your portfolio is invested 40 percent each...
Consider the following information about three stocks:
a. If your portfolio is invested 40 percent each in A and B and
20 percent in C, what is the portfolio expected return? The
variance? The standard deviation?
b.If the expected T-bill is is 3.80 percent, what is the
expected premium on the portfolio?
c. If the expected inflation rate is 3.50 percent, what are the
appropriate and exact expected real returns on the portfolio?What
are the approximate and exact expected real...
1. Suppose the volatility of Dell stock is 0.38 while that of Apple stock is 0.54...
1. Suppose the volatility of Dell stock is 0.38 while that of Apple stock is 0.54 while the correlation of Dell with Apple stocks is 0.32. What is the volatility of a portfolio with equal amounts invested in Dell and Apple? 2. Suppose the risk premium is 7% while the risk free rate is 3.6% and that Charlie Inc. has a beta of -0.35. What is the required return on Charlie Inc.? Does your answer make sense? Why or why...
Problem 6.12 If the expected return on the market is 7 percent and the risk-free rate...
Problem 6.12 If the expected return on the market is 7 percent and the risk-free rate is 4 percent, What is the expected return for a stock with a beta equal to 1.10? (Round answer to 2 decimal places, e.g. 0.15.) Expected return LINK TO TEXT What is the market risk premium? (Round answer to 2 decimal places, e.g. 0.15.) Market risk premium Click if you would like to Show Work for this question: Open Show Work LINK TO TEXT...
Which of the following statements is CORRECT? Group of answer choices -The CAPM has been thoroughly...
Which of the following statements is CORRECT? Group of answer choices -The CAPM has been thoroughly tested, and the theory has been confirmed beyond any reasonable doubt. -A graph of the SML as applied to individual stocks would show required rates of return on the vertical axis and standard deviations of returns on the horizontal axis. -If investors become more risk averse, then (1) the slope of the SML would increase and (2) the required rate of return on low-beta...
1. The standard deviation of market portfolio returns is 15%. The beta of a mutual fund is 1.5. Can the standard deviati...
1. The standard deviation of market portfolio returns is 15%. The beta of a mutual fund is 1.5. Can the standard deviation of mutual fund's returns be 20%? a. Yes b. No 2. The risk-free rate is 2%. The β of stock 1 is 0.8 while its σ is 15%. The beta of stock 2 is 1.6 while its σ is 45%. Which of the following statements is true in equilibrium? a. The risk premium of stock 2 would be three...
The common stock of Up-Towne Movers is selling for $33 a share and has a beta...
The common stock of Up-Towne Movers is selling for $33 a share and has a beta of 1.25. If the CAPM expected return is 15.5% and the market risk premium is 10.0%, what is the risk free rate of return? Group of answer choices 2.0% 3.0% 12.5% 13.5%
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...
Consider the following information about three stocks:
a. If your portfolio is invested 40 percent each in A and B and
20 percent in C, what is the portfolio expected return? The
variance? The standard deviation?
b.If the expected T-bill is is 3.80 percent, what is the
expected premium on the portfolio?
c. If the expected inflation rate is 3.50 percent, what are the
appropriate and exact expected real returns on the portfolio?What
are the approximate and exact expected real...
1. Suppose the volatility of Dell stock is 0.38 while that of Apple stock is 0.54 while the correlation of Dell with Apple stocks is 0.32. What is the volatility of a portfolio with equal amounts invested in Dell and Apple? 2. Suppose the risk premium is 7% while the risk free rate is 3.6% and that Charlie Inc. has a beta of -0.35. What is the required return on Charlie Inc.? Does your answer make sense? Why or why...
Problem 6.12 If the expected return on the market is 7 percent and the risk-free rate is 4 percent, What is the expected return for a stock with a beta equal to 1.10? (Round answer to 2 decimal places, e.g. 0.15.) Expected return LINK TO TEXT What is the market risk premium? (Round answer to 2 decimal places, e.g. 0.15.) Market risk premium Click if you would like to Show Work for this question: Open Show Work LINK TO TEXT...
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