Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Calculate the required rate of return for CDC Enterprises assuming that investors expect a 5.0% rate of inflation in the future. The real risk-free rate

Calculate the required rate of return for CDC Enterprises assuming that investors expect a 5.0% rate of inflation in the future. The real risk-free rate is 2.0%, and the market risk premium is 8.0%. CDC has a beta of 2.1, and its realized rate of return has averaged 11.5% over the past 5 years. Round your answer to two decimal places.

r R F = r + I P ; r i = r R F + ( r M r R F ) B e t a

Group of answer choices

22.4%

24.7%

23.8%

25.7%

21.3%

Please show work

An individual has $25,000 invested in a stock with a beta of 1.6 and another $70,000 invested in a stock with a beta of 2.5. If these are the only two investments in her portfolio, what is her portfolio's beta? Do not round intermediate calculations. Round your answer to two decimal places.

B e t a p = W i B e t a i

Group of answer choices

2.26

2.05

4.13

5.64

3.07

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Contemporary Financial Management

Authors: Don Cyr, Alfred Kahl, William Rentz, R. Moyer

1st Edition

017616992X, 978-0176169923

More Books

Students also viewed these Finance questions