
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Transcribed Image Text:risk-free rate have to be if they are correctly priced? (See Problems 19 and 20.)
11.4
CAPM Suppose the risk-free rate is 8 percent. The expected return on the market is
14 percent. If a particular stock has a beta of .60, what is its expected return based
on the CAPM? If another stock has an expected return of 20 percent, what must its
beta be? (See Problem 13.)
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- 26. The risk-free rate of return is currently 3.5 percent, whereas the market risk premium is 9 percent. If the beta of Base Inc., stock is 1.25, then what is the expected return on Base Inc.?arrow_forward10arrow_forwardQuestion 4 A stock has an expected return of 13.6 percent, the risk - free rate is 3.7 percent, and the market risk premium is 7.1 percent. What must the beta of this stock be?arrow_forward
- a) Astock has expected return of 10% and a beta of 0.70. Assume the risk - free rate is 5.5%. what must the expected return on the market be? b ) A stock has expected return of 15%, its beta is 1.45, and the expected return on the market is 12%. What must the risk - free rate be?arrow_forward15 A stock with a beta of zero would be expected to have a rate of return equal to Group of answer choices the risk-free rate the market rate of return the market risk premium zeroarrow_forwardWhat is the expected return for Stock A if it has a beta of 1.25, the risk-free rate is 1.5%, and the expected market return is 10.2%? 12.38% 14.25% 12.75% 11.25% 10.88%arrow_forward
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