PT 1:
ABC, Inc., has a beta of 2.03. The risk-free rate is 2.3% and the market risk premium is 6%. What is the required rate of return on ABC's stock?
Note: Convert your answer to percentage and round off to two decimal points. MIGHT BE EASIER TO USE GOAL SEEK?
PT 2:
Market beta is a measurement of systematic risk and will affect the expected risk. T OR F
PT 1:
Required Return = Risk Free Rate + Market Risk Premium * Beta
= 2.3% + 6%*2.03
= 14.48%
Answer : 14.48%
PT 2:
Answer : True
Market beta measures the risk that cannot be diversified away. It measures the risk related to the macro economic factors and higher beta would warrant a higher expected retrun out of the stock.
PT 1: ABC, Inc., has a beta of 2.03. The risk-free rate is 2.3% and the...
ABC, Inc., has a beta of 2.03. The risk-free rate is 2.3% and the market risk premium is 6%. What is the required rate of return on ABC's stock?
ABC, Inc., has a beta of 1.19. The risk-free rate is 2.91% and the market risk premium is 7.89%. What is the required rate of return on ABC's stock?Note: Convert your answer to percentage and round off to two decimal points.
1. If a stock has a market beta less than 1, the expected return will be less than expected return of market portfolio. True or False? 2. ABC, Inc., has a beta of 1.99. The risk-free rate is 3.45% and the market risk premium is 5.74%. What is the required rate of return on ABC's stock? Note: Convert your answer to percentage and round off to two decimal points. 3. Semi-strong-form efficient markets are not weak-form efficient. True or False?
1.Suppose the nominal rate is 15.62% and the inflation rate is 2.37%. What is the real rate? Use the Fisher Equation to get the answer.Note: Convert your answer to percentage and round off to two decimal points. Do not enter % in the answer box. 2.ABC, Inc., has a beta of 1.19. The risk-free rate is 2.91% and the market risk premium is 7.89%. What is the required rate of return on ABC's stock?Note: Convert your answer to percentage and...
Security ABC has a price of $35 and a beta of 1.5. The risk-free rate is 5% and the market risk premium is 6%. a)Explain the terms beta and market risk premium. b)What is the market portfolio? c)According to the CAPM, what return do investors expect on the security? d)Investors expect the security not to pay any dividend next year. e)At what price do investors expect the security to trade next year? f)At what price do investors expect the security...
BJB, Inc. stock has an expected return of 12.7 percent. The risk-free rate is 2.3 percent and the market risk premium is 5.7 percent. What is the stock's beta?
Security ABC has a price of $35 and a beta of 1.5. The risk-free rate is 5% and the market risk premium is 6%. According to the CAPM, what return do investors expect on the security? Investors expect the security not to pay any dividend next year. At what price do investors expect the security to trade next year? At what price do investors expect the security to trade next year, if the expected dividend next year is $2 instead...
The market risk premium is 8.4% and the risk-free rate is 2.3%. The beta of the stock is 1.22. What is the required return of the stock? Enter you answer as a percentage. Do not include a percent sign in your answer. Enter your answer rounded to 2 DECIMAL PLACES. Enter your response below. % Click "Verify" to proceed to the next part of the question
ABC Corp has a beta of 1.5, the current risk-free interest rate is 3%, and the expected return on the market is 12.0%. The market cap of ABC is $2 billion and the company has one 10-year bond outstanding with face value of $1 billion and coupon of 5%. The bond is trading at a premium price of 110. The company’s marginal tax rate is 25%. What is the ABC’s WACC?
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...