Question
25.If the market premium is 11.38 percent, the risk-free rate is 4.19 percent, the inflation rate is 2.67 percent, and Middlefield Motors common stock has
25.If the market premium is 11.38 percent, the risk-free rate is 4.19 percent, the inflation rate is 2.67 percent, and Middlefield Motors common stock has a beta of 0.74, then what is the expected return for Middlefield Motors stock? Answer as a rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as .0098.
27.What is the risk premium for Litchfield Design stock if the stock has a beta of 0.69, the expected return on the market is 12.64 percent, the risk-free rate is 3.22 percent, and inflation is 1.07 percent? Answer as a rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as .0098.
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