Question
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
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