Question
I need help checking my work and answers for this assignment. Please help by showing any work that is applicable so I can follow through
I need help checking my work and answers for this assignment. Please help by showing any work that is applicable so I can follow through to the answer and see where I went wrong, if in fact I did. Thank you.
13.Calculate the required rate of return for Best Inc., assuming that (1) investors expect a
3% rate of inflation in the future, (2) the real risk-free rate is 3.0%, (3) the market risk premium
is 5.0%, (4) the firm has a beta of 1.2, and (5) its realized rate of return has averaged 10.0%
over the last 5 years.
14.Calculate the required rate of return for Hope Inc., assuming that (1) investors expect a
2.0% rate of inflation in the future, (2) the real risk-free rate is 3.5%, (3) the market return on
S&P 500 Index is 8.5%, (4) the firm has a beta of 1.5, and (5) its realized rate of return has
averaged 10.0% over the last 5 years.
15.Chance Inc's stock has an expected return of 15%, a beta of 1.5, and is in
equilibrium.Assume the nominal risk-free rate is 4.00%.
(a) what is the market risk premium?
(b) What is the equity risk premium?
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