Question

The risk-free rate of return is 5%, the expected return of the market index is 10%,...

The risk-free rate of return is 5%, the expected return of the market index is 10%, and the expected return of Stock Y is 12%. Based on this information, what is Stock Y’s beta coefficient?

If Stock Y’s beta coefficient is 2.0, what is the stock’s (new) required rate of return?

Please show the detailed calculation process.

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
The risk-free rate of return is 4 percent, and the expected return on the market is...
The risk-free rate of return is 4 percent, and the expected return on the market is 7.1 percent. Stock A has a beta coefficient of 1.4, an earnings and dividend growth rate of 6 percent, and a current dividend of $1.50 a share. Do not round intermediate calculations. Round your answers to the nearest cent. What should be the market price of the stock? $ If the current market price of the stock is $45.00, what should you do? The...
The risk-free rate of return is 2 percent, and the expected return on the market is...
The risk-free rate of return is 2 percent, and the expected return on the market is 7.8 percent. Stock A has a beta coefficient of 1.7, an earnings and dividend growth rate of 7 percent, and a current dividend of $3.00 a share. Do not round intermediate calculations. Round your answers to the nearest cent. If the beta coefficient falls to 1.4 and the other variables remain constant, what will be the value of the stock? $___________ Explain why the...
3. If the risk-free rate is 6% and the expected return of the market is 12%,...
3. If the risk-free rate is 6% and the expected return of the market is 12%, what is the expected return of a portfolio that is equally invested in treasury bills and a stock with a beta of 1.3? A. 9.9% B. 10.2% C. 13.8% D. 12.9% E. 19.8% The answer is A. Please show the precess.
Suppose the market return is 8%, the risk-free rate is 1% and the beta for a...
Suppose the market return is 8%, the risk-free rate is 1% and the beta for a given stock is 1.2. Answer the following questions based on this information: What is the required return for this stock? If the beta increases by 50% (but risk-free rate remains 1%), what will be the new required return for the stock? What is the percentage-wise change in required return compared to your answer to A) above? If the market return increases by 50% (but...
1. Assume the expected return on the market is 5 percent and the risk-free rate is...
1. Assume the expected return on the market is 5 percent and the risk-free rate is 4 percent. - What is the expected return for a stock with a beta equal to 1.00? (Round answers to 2 decimal places, e.g. 15.25.) Expected return 2. Assume the expected return on the market is 8 percent and the risk-free rate is 4 percent. - What is the expected return for a stock with a beta equal to 1.50? (Round answers to 2...
() The risk-free rate and the expected market rate of return are 0.056 and 0.125, respectively....
() The risk-free rate and the expected market rate of return are 0.056 and 0.125, respectively. According to the capital asset pricing model (CAPM), what is the expected rate of return on a security with a beta of 1.25?     (s) Consider the CAPM. The risk-free rate is 5%, and the expected return on the market is 15%. What is the beta on a stock with an expected return of 17%? (A coupon bond pays annual interest, has a par value...
eBook Problem 11-06 The risk-free rate of return is 1 percent, and the expected return on...
eBook Problem 11-06 The risk-free rate of return is 1 percent, and the expected return on the market is 9 percent. Stock A has a beta coefficient of 1.5, an earnings and dividend growth rate of 3 percent, and a current dividend of $2.80 a share. Do not round intermediate calculations. Round your answers to the nearest cent. $   The stock -Select-shouldshould notItem 2 be purchased. $   $   $   The increase in the return on the market -Select-increasesdecreasesItem 6 the...
Stock X has a 10% expected return, a beta coefficient of 0.9, and a 35% standard...
Stock X has a 10% expected return, a beta coefficient of 0.9, and a 35% standard deviation of expected returns. Stock Y has a 12.5% expected return, a beta coefficient of 1.2, and a 25% standard deviation. The risk-free rate is 6%, and the market risk premium is 5%. a. Calculate each stock’s coefficient of variation. b. Which stock is riskier for a diversified investor? c. Calculate each stock’s required rate of return. d. On the basis of the two...
9‐1   The market has an expected return of 11 percent, and the risk‐free rate is 5...
9‐1   The market has an expected return of 11 percent, and the risk‐free rate is 5 percent. Pfizer has a beta of 0.9. What is the required rate of return for Pfizer? 9‐2   The market has an expected return of 12 percent, and the risk‐free rate is 5 percent. Activalue Corp’s systematic risk is 80 percent that of the market as a whole. What is the required rate of return for this company?
The current risk free rate of return is 3% and the expected return on the market...
The current risk free rate of return is 3% and the expected return on the market is 8%. Calculate the cost of equity (required rate of return) for a stock with a Beta = 0.54. Calculate the cost of equity (required rate of return) for a stock with a Beta = 1.35. Create a one way data table to determine the cost of equity by varying Beta. Use your data table to generate a graph. Include a title and label...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT