rate positively ..
Required rate of return = Risk free rate + market risk premium *beta | ||||||
3%+7%*1.5 | ||||||
13.5% | ||||||
Actual return = | 15% | |||||
Therefore stock is | Underpriced . |
Over the past year you held a stock that generated a return of 15 percent. The...
Over the past year you held a stock that generated a return of 15 percent. The stock's beta was 1.5, the risk-free rate was 3 percent and the market risk premium was 7 percent. a. Based on the capital asset pricing model (CAPM) what is the return that you should have expected to earn on this stock? (5 pts)
REQUIRED RATE OF RETURN (Percent) 20.0 Return on HC's Stock . / / 1.5 2.0 RISK (Beta) / / / / / CAPM Elements Risk-free rate (RF) Market risk premium (RPM) Happy Corp. stock's beta Required rate of return on Happy Corp. stock nalyst believes that inflation ir at Value CAPM Elements Risk-free rate (TRF) Market risk premium (RPM) Happy Corp. stock's beta Required rate of return on Happy Corp. stock An analyst believes that inflation is going to increase...
Your analysis indicates that the stock of Dewey Cheatham and Howe Industries will return 10% next year. The stock has a beta of 1.5, the risk free rate is 4% and the expected market risk premium is 5%. Is the stock over-valued, undervalued, or fairly valued? Explain.
Stock Y has a beta of 1.20 and an expected return of 11.4 percent. Stock Z has a beta of .80 and an expected return of 8 percent. If the risk-free rate is 2.5 percent and the market risk premium is 7 percent, are these stocks correctly priced? Stock Y Stock Z
Security X has a rate of return of 13% and a beta of 1.15. The risk-free rate is 5% and the market expected rate of return is 10%. According to the capital asset pricing model, security X is 1) fairly priced 2) underpriced 3) overpriced 4) None of the answers are correct Security X has a rate of return of 13% and a beta of 1.15. The risk-free rate is 5% and the market expected rate of return is 10%....
#11 and #13 (CAPM) The stock is appropriately priced and its expected annual return is 10.4%. The annual return on the 30-year Treasury is 3.5%, and the expected annual return on S&P 500 is 13%. What is the stock's beta coefficient? 12. (CAPM) The stock is appropriately priced and its expected annual return is 14.1%. The annual return on the 30-year Treasury is 2.5%, and the expected annual return on S&P 500 is 12%. What is the stock's beta coefficient?...
What was the real rate of return over the past year (from one year ago to today) for a stock if the inflation rate over the past year was 5.58 percent, the risk-free return over the past year was 6.97 percent, the stock is currently priced at 82.86 dollars, the stock was priced at 73.56 dollars 1 year ago, and the stock just paid a dividend of 2.72 dollars? Answer as a rate in decimal format so that 12.34% would...
What was the real rate of return over the past year (from one year ago to today) for a stock if the inflation rate over the past year was 3.59 percent, the risk-free return over the past year was 5.94 percent, the stock is currently priced at 78.02 dollars, the stock was priced at 72.87 dollars 1 year ago, and the stock just paid a dividend of 2.9 dollars? Answer as a rate in decimal format so that 12.34% would...
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?
5. Stock x, stock Y, and the market have had the following returns over the past four years. х Y Market 11% Year 1999 2000 2001 2002 10% 4% 7% 12% -3% 21% -5% 17% 12% -3% -2% The risk-free rate is 7 percent. The market risk premium is 5 percent. What is the required rate of return for a portfolio that consists of $14,000 invested in Stock X and $6,000 invested in Stock y rates of return?