Question

Company A has a beta of 0.70, while Company B's beta is 0.95. The required return...

Company A has a beta of 0.70, while Company B's beta is 0.95. The required return on the stock market is 11.00%, and the risk-free rate is 4.25%. What is the difference between A's and B's required rates of return?

Select the correct answer.

a. 1.61%
b. 1.63%
c. 1.65%
d. 1.67%
e. 1.69%
Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Company A has a beta of 0.70, while Company B's beta is 0.85. The required return...
Company A has a beta of 0.70, while Company B's beta is 0.85. The required return on the stock market is 11.00%, and the risk-free rate is 4.25%. What is the difference between A's and B's required rates of return?
Company A has a beta of 0.70, while Company B's beta is 1.50. The required return...
Company A has a beta of 0.70, while Company B's beta is 1.50. The required return on the stock market is 11.00%, and the risk-free rate is 4.25%. What is the difference between A's and B's required rates of return? (Hint: First find the market risk premium, then find the required returns on the stocks.) Select the correct answer. a. 5.34% b. 5.36% c. 5.38% d. 5.42% e. 5.40%
Company X has a beta of 0.70, while Company Y's beta is 1.20. The required return...
Company X has a beta of 0.70, while Company Y's beta is 1.20. The required return on the stock market is 11.00%, and the risk-free rate is 4.25%. A fund has $3500 invested in company X stock and $4500 invested in the stock of company Y. a) What is the difference between X's and Y's required rates of return? b) What is fund's beta? c) What is fund's required rate of return? d) Suppose inflation decreases by 1.5%, what is...
You need to write down all necessary steps/formulas leading to your results in EXCEL FORMAT: Company...
You need to write down all necessary steps/formulas leading to your results in EXCEL FORMAT: Company A has a beta of 0.70, while Company B's beta is 1.20. The required return on the stock market is 11.00%, and the risk-free rate is 4.25%. What is the difference between A's and B's required rates of return?
Stock A's stock has a beta of 1.30, and its required return is 14.00%. Stock B's...
Stock A's stock has a beta of 1.30, and its required return is 14.00%. Stock B's beta is 0.80. If the risk-free rate is 4.75%, what is the required rate of return on B's stock? (Hint: First find the market risk premium.) Select the correct answer. a. 10.28% b. 10.32% c. 10.44% d. 10.36% e. 10.40%
Hocking Manufacturing Company has a beta of .75, while Levine Industries has a beta of 1.40....
Hocking Manufacturing Company has a beta of .75, while Levine Industries has a beta of 1.40. The required return on the stock market is 12.00%, and the risk-free rate is 4.25%. What is the difference between Hocking's and Levine's required rates of return
The risk-free rate is 7%; Stock A has a beta of 2.0; Stock B has a...
The risk-free rate is 7%; Stock A has a beta of 2.0; Stock B has a beta of 1.0; and the market risk premium, rM – rRF, is positive. Which of the following statements is CORRECT? a. Stock A's required rate of return is twice that of Stock B. b. If Stock B's required return is 11%, then the market risk premium is 5%. c. If the risk-free rate remains constant but the market risk premium increases, Stock A's required...
Beale Manufacturing Company has a beta of 2.5, and Foley Industries has a beta of 0.95....
Beale Manufacturing Company has a beta of 2.5, and Foley Industries has a beta of 0.95. The required return on an index fund that holds the entire stock market is 12.5%. The risk-free rate of interest is 3.25%. By how much does Beale's required return exceed Foley's required return? Do not round intermediate calculations. Round your answer to two decimal places.
Stock R has a beta of 2.0, Stock S has a beta of 0.95, the required...
Stock R has a beta of 2.0, Stock S has a beta of 0.95, the required return on an average stock is 13%, and the risk-free rate of return is 5%. By how much does the required return on the riskier stock exceed the required return on the less risky stock? Round your answer to two decimal places. %
BETA AND REQUIRED RATE OF RETURN A stock has a required return of 12%; the risk-free...
BETA AND REQUIRED RATE OF RETURN A stock has a required return of 12%; the risk-free rate is 7%; and the market risk premium is 3%. What is the stock's beta? Round your answer to two decimal places. If the market risk premium increased to 7%, what would happen to the stock's required rate of return? Assume that the risk-free rate and the beta remain unchanged. If the stock's beta is equal to 1.0, then the change in required rate...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT