The market expected return is 14% with a standard deviation of 18%. The risk-free rate is 6%. Security XYZ has just paid a dividend of $1 and has a current price of $13.95. What is the beta of Security XYZ if its dividend is expected to grow at 6% per year indefinitely? ○ 0.90 ○ 0.85 O 0.95 O 1.05
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- Suppose CAPM holds. Pfizer has a beta of 0.7, the average return on the market is 12% per year and the risk free rate is 2%. What should be the expected return of Pfizer?Paycheck, Inc. has a beta of 1.02. If the market return is expected to be 16.90 percent and the risk-free rate is 9.90 percent, what is Paycheck’s risk premium? (Round your answer to 2 decimal places.) Paycheck's Risk Premium: ___.__%Assume the risk free rate is 4% and the beta for a particular firm is 2, current firm share price is $35 and the market risk premium is 8%. Given the risk level what is the one year required rate of return (we will call this k)? If next year’s expected dividend is $3, use k from part A to solve for the expected next year’s price.
- JJM has a beta coefficient of 1.2. currently the risk free rate is 2 percent and the anticipated return on the market is 8 percent. JJM pays a $4.50 dividend that is growing at 4 percent annually. A. what is the required return for JJM? B. GIVEN THE REQUIRED RETURN, WHAT IS THE VALUE OF THE STOCK? C. IF THE STOCK IS SELLING FOR $100, WHAT SHOULD YOU DO? D. IF THE BETA COEFFICIENT DECLINES TO 1.0, E=WHAT IS THE NEW VALUE OF THE STOCK? E. IF THE PRICE REAMINS $100, WHAT COURSE OF ACTION SHOULD YOU TAKE GIVEN THE VALUATION IN D?Assume the risk-free rate is 4% and the beta for a particular firm is 2, current firm share price is $35 and the market risk premium is 8%. A.Given the risk level, what is the one-year required rate of return (we will call this k)? B.If next year’s expected dividend is $3, use k from part A to solve for the expected next year’s price.The market price of a security is $50. Its expected rate of return is 10%. The risk-free rate is 5%, and the market risk premium is 8%. 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. (Round your answer to 2 decimal places.)
- A company XYZ paid a dividend of Rs.12 per share yesterday and is expected to pay dividend once per year in the future (at same calendar date as this year) which will grow at a rate 5% to eternity. a)Draw the cash flow diagram. b)If the expected market return is 12%, the risk-free rate is 5%, and the CAPM beta of the company XYZ is 0.8, what is the expected return on equity of the company? c)What is the expected current share price of the company from the dividend growth model?Thank youJersey Jewel Mining has a beta coefficient of 1.2. Currently the risk-free rate is 2 percent and the anticipated return on the market is 8 percent. JJM pays a $4.50 dividend that is growing at 4 percent annually. What is the required return for JJM? Given the required return, what is the value of the stock? If the stock is selling for $100, what should you do? If the beta coefficient declines to 1.0, what is the new value of the stock? If the price remains $100, what course of action should you take given the valuation in d? Could you write the answers in an equation form so i can understand what or how the formulas work
- Jersey Jewel Mining has a beta coefficient of 1.2. Currently the risk-free rate is 2 percent and the anticipated return on the market is 8 percent. JJM pays a $4.50 dividend that is growing at 4 percent annually. What is the required return for JJM? Given the required return, what is the value of the stock? If the stock is selling for $100, what should you do? If the beta coefficient declines to 1.0, what is the new value of the stock? If the price remains $100, what course of action should you take given the valuation in d?Calculate the required rate of return for Mudd Enterprises assuming that investors expect a 3.4% rate of inflation in the future. The real risk-free rate is 1.0%, and the market risk premium is 6.5%. Mudd has a beta of 1.9, and its realized rate of return has averaged 14.0% over the past 5 years. Round your answer to two decimal places. %Paycheck, Inc. has a beta of 1.19. If the market return is expected to be 13.50 percent and the risk-free rate is 6.70 percent, what is Paycheck’s risk premium? (Round your answer to 2 decimal places.)