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Hello tutors. I need help with some finance problems. Please see attached. Due today at 3PM. Much appreciated. 2. Investors expect the market rate of
Hello tutors. I need help with some finance problems. Please see attached. Due today at 3PM. Much appreciated.
2. Investors expect the market rate of return this year to be 13.00%. The expected rate of return on a stock with a beta of 1.6 is currently 20.80%. If the market return this year turns out to be 11.40%, how would you revise your expectation of the rate of return on the stock? (Round your answer to 1 decimal place.) What is revised rate of return? 3. The market price of a security is $70. Its expected rate of return is 12%. The risk-free rate is 7%, and the market risk premium is 7%. What will the market price of the security be if its beta doubles (and all other variables remain unchanged)? Assume the stock is expected to pay a constant dividend in perpetuity. What is the market price? 5. A share of stock is now selling for $125. It will pay a dividend of $8 per share at the end of the year. Its beta is 1. What do investors expect the stock to sell for at the end of the year? Assume the risk-free rate is 7% and the expected rate of return on the market is 19%. (Round your answer to 2 decimal places.) What is the expected selling price? 7. A stock has an expected return of 6%. What is its beta? Assume the risk-free rate is 5% and the expected rate of return on the market is 10%. (Negative value should be indicated by a minus sign. Round your answer to 2 decimal places.) Calculate BetaStep by Step Solution
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