Question
1.The risk-free rate is 6% and the expected rate of return on the market portfolio is 11%. a. Calculate the required rate of return on
1.The risk-free rate is 6% and the expected rate of return on the market portfolio is 11%. a. Calculate the required rate of return on a security with a beta of 1.75. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
2.A share of stock with a beta of 0.81 now sells for $56. Investors expect the stock to pay a year-end dividend of $4. The T-bill rate is 4%, and the market risk premium is 7%. If the stock is perceived to be fairly priced today, what must be investors expectation of the price of the stock at the end of the year? (Do not round intermediate calculations. Round your answer to 3 decimal places.)
3. The risk-free rate is 6% and the expected rate of return on the market portfolio is 11%.
a. Calculate the required rate of return on a security with a beta of 1.75. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
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