Suppose the risk-free rate of return, r RF , is 4 percent, and the market return, r

Question:

Suppose the risk-free rate of return, r_RF, is 4 percent, and the market return, r_M, is expected to be 12 percent. What is the required rate of return for a stock with a beta coefficient, b, equal to 2.5?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

CFIN

ISBN: 978-1305666870

5th edition

Authors: Scott Besley, Eugene Brigham

See More Books

Question Posted: Jan 31, 2020 11:36 AM

See More Questions

If the risk-free rate of return, rRF, is 4 percent and the market return, rM, is expected to be 12 percent, what is the required rate of return for a stock with a beta, 13, equal to 2.5?
1) The expected return on KarolCo. stock is 16.5 percent. If the risk-free rate is 5 percent and the beta of KarolCo is 2.3, then what is the risk premium on the market assuming CAPM is true? a. 2.5%...
The risk- free rate of return is 8 percent, the expected rate of return on the market portfolio is 15 percent, and the stock of Xyrong Corporation has a beta coefficient of 1.2. Xyrong pays out 40...
Suggest a systematic process that Daimler could have followed to increase the likelihood of merger success. Provide examples on how Daimler might have made such a process succeed.
How does an electronic transition resemble a vibrational transition? How do they differ?
What is the purpose of marketing research? Give several examples of market measurement studies. Distinguish between market potential and sales potential. Give an example of a market research study...
Fill in the missing items for the following inventories: (A) (B) (C) Beginning balance..........c:ccceeeee $136,000 $ 56,800 $312,000 EmaimoibalanC@ ga csccetecmthtese fte e fi 49,600 256,000...
Suppose Muddyriver.com sells 2,000 books on account for $19 each (cost of these books is $22,800), credit terms 1/20, n/45 on October 10, 2016, to The Salem Store. One hundred of these books (cost...
1. Please find the following data representing the previous 13 years of the NASDAQ market price along with the individual stock of Apple (AAPL), which is listed on the NASDAQ exchange, and answer the...
The platform assembly has weight W1 and center of gravity at G1. If it is intended to support a maximum load W2 placed at point G2, determine the smallest counterweight W that should be placed at B...
The current risk-free rate of return, r RF , is 3 percent and the market risk premium, RPM, is 6 percent. If the beta coefficient associated with a firms stock is 1.5, what should be the stocks...
ZR Corporations stock has a beta coefficient equal to 0.8 and a required rate of return equal to 11 percent. If the expected return on the market is 12.5 percent, what is the risk-free rate of...
Lower prices for color laser printers make them a great alternative to inkjet printers. PC World reviewed and rated 10 color laser printers. The following data show the printing speed for color...
On July 1, 2025, Sheridan Co. pays $15,000 to Blue Spruce Insurance Co. for a 2-year insurance contract. Both companies have fiscal years ending December 31. (a1) Journalize the entry on July 1 and...
A CU triaxial test with c = 20 psi is performed on a sand and a deviator stress of 80 psi fails the specimen. Previous tests revealed that the effective friction angle for this sand is 35. Calculate...
Haliburton Mills Inc. is a large producer of men's and women's clothing. The company uses standard costs for all of its products. The standard costs and actual costs for a recent period are given...
The employee.class.php file contains an abstract, base class named Employee . One of the attributes of the class is an object of Person . This demonstrates one of the three relationship types among...
A direct shear test is performed on a saturated specimen of loose sand. A normal stress equal to 100 kPa is applied and a maximum shear stress of 75 kPa is measured in the shear test. Determine the...
What happens to the number of kanban cards in the process if the replenishment time goes up? a. The number of kanban cards increases. b. The number of kanban cards stays the same. c. The number of...
Classify each of the following activities as proper or prohibited under the various consumer statutes you have studied. a. Calling a hospital room to talk to a debtor who is a patient there. b....
Polycom Systems earned $553 million last year and paid out 25 percent of earnings in dividends. a. By how much did the companys retained earnings increase? b. With 100 million shares outstanding and...
Planetary Travel Co. has $240,000,000 in stockholders equity. Eighty million dollars is listed as common stock and the balance is in retained earnings. The firm has $500,000,000 in total assets and 2...
A financial analyst is attempting to assess the future dividend policy of Environmental Systems by examining its life cycle. She anticipates no payout of earnings in the form of cash dividends during...
PART II (35 possible marks) Woolsworth Corporation manufactures and sells woolen jackets. It is ready to begin its fourth quarter, in which they have their highest sales. The company has approached...
1) A portfolio consists for four securities A, B, C &D have the following expected rate of return and portfolio value invested. Security Expected Return Proportion of investment A 15% 30% B 12% 20% C...
A firm financed by equity and debt only has financial risk. (Your answer must begin with True or False followed by your explanation.) The level of debt in a firm does not affect the firms valuation...

Suppose the risk-free rate of return, r RF , is 4 percent, and the market return, r

Question:

Step by Step Answer:

r RF 4 ...View the full answer

CFIN

Students also viewed these Business questions