Project A has a beta of 1.4 and an expected rate of rate of return of 14.2%. Project B has a beta of 0.7 and an expected rate of return of 8.7%. What is the risk-free rate?
14.2%=risk free*(1-1.4)+1.4*market
8.7%=risk free*(1-0.7)+0.7*market
Hence, risk free rate=3.20%
Project A has a beta of 1.4 and an expected rate of rate of return of...
Question #1: Stock Y has a beta of 1.4 and an expected return of 15.2 percent. Stock Z has a beta of 0.7 and an expected return of 9.1 percent. If the risk-free rate is 5.4 percent and the market risk premium is 6.4 percent, the reward-to-risk ratios for stocks Y and Z ________are _________ and percent, respectively. First blank = 7.00 Second blank = 5.28 I am not sure if the second answer is 5.28 or 5.29 ? please...
The expected rate of stock market return is 10.6% and the risk-free rate is 1.4%. What is the appropriate cost of capital for a project with Beta = 1.4?
a. Compute the expected rate of return for Intel common stock,
which has a 1.4 beta. The risk-free rate is 3
percent and the market portfolio (composed of New York Stock
Exchange stocks) has an expected return of 12 percent.
b. Why is the rate you computed the expected rate?
P8-13 (similar to) Question Help (Expected rate of return using CAPM) a. Compute the expected rate of return for Intel common stock, which has a 1.4 beta. The risk-free rate...
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Beta of a project. Magellan is adding a project to the company portfolio and has the following information: the expected market return is 14.6%, the risk-free rate is 6.7%, and the expected return on the new project is 14.2%. What is the project's beta? What is the project's beta? || (Round to three decimal places.)
Stock Y has a beta of 1.4 and an expected return of 13 percent. Stock Z has a beta of 0.85 and an expected return of 10.4 percent. Required: What would the risk-free rate have to be for the two stocks to be correctly priced relative to each other? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).) Risk-free rate % Suggestions: We need to set the reward-to-risk ratios of the...
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Stock Y has a beta of 1.4 and an expected return of 15.2 percent. Stock Z has a beta of 7 and an expected return of 9.1 percent. If the risk-free rate is 5.4 percent and the market risk premium is 6.4 percent, the reward-to-risk ratios for Stocks Y and Z are and percent, respectively. Since the SML reward-to-risk is percent, Stock Y is undervalued and Stock Z is overvalued (Do not round intermediate calculations and...
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