WWF Inc.'s preferred stock pays $12 per share, its beta is 1.2. If the risk-free rate...
WWF Inc.'s preferred stock pays $12 per share, its beta is 1.2. If the risk-free rate is .04 and the market risk premium is .08, what is the expected price of the stock?
Please explain steps, thank you.
Homework Answers
Expected return = risk free rate + beta * market risk premium
= 0.04 + 1.2 * 0.08
= 13.6%
=>
Expected price = 12/0.136
= 88.24
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WWF Inc.'s preferred stock pays $12 per share, its beta is 1.2. If the risk-free rate...
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TOISRULIUSS. Expected Return = Risk free Rate + beta (expected market return - risk free rate)...
TOISRULIUSS. Expected Return = Risk free Rate + beta (expected market return - risk free rate) .04 +0.80.09 - .04) = .08 = 8.0% 3. Suppose the MiniCD Corporation's common stock has a return of 12%. Assume the risk- free rate is 4%, the expected market return is 9%, and no unsystematic influence affected Mini's return. The beta for MiniCD is:
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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
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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.
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12
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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.
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12
HUB Inc. common stock has a beta of 1.29. The risk-free rate of return is 2.75% and the return on the S&P 500 is expected to be 9.80%. What is the stock's risk premium? 7.68% 9.80% 8.37% 09.09% O 7.94%
Risk-free rate is 4%. The expected market return is 12%. Suppose beta = 1.2. What is the expected return of the stock?
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