Answered step by step
Verified Expert Solution
Question
1 Approved Answer
A stock has a beta of 1.31, the expected return on the market is 11 percent, and the risk-free rate is 2.5 percent. What must
A stock has a beta of 1.31, the expected return on the market is 11 percent, and the risk-free rate is 2.5 percent. What must the expected return on this stock be? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) QUESTION 4 Stock Y has beta of 1.4 and an expected return of 12.32 percent. Stock Z has a beta of 0.60 and an expected return of 7 percent. If the risk-free rate is 4.0 percent and the market risk premium is 9.2 percent, what is the reward-to-risk ratio of Y? (Enter the answer to this question below. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) Also, are the stocks correctly priced? (you won't be able to enter the answer to this question, but think about it) QUESTION 5 A stock has a beta of 0.6 and an expected return of 10.9 percent. If the risk-free rate is 2 percent, what is the market risk premium? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) QUESTION 6 A stock has an expected return of 12 percent, its beta is 1.78, and the risk-free rate is 2.6 percent. What must the expected return on the market be? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started