Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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a company has a beta value of 1.3, the risk-free
premium for shares over the risk-free rate of return has been 5%. Calculate the return expected
on shares in X assuming the
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- The risk-free rate is 1.45% and the market risk premium is 5.21%. According to the Capital Asset Pricing Model (CAPM), a stock with a beta of 1.13 will have an expected return of ________%. 1) 5.56% 2) 13.25% 3) 15.66% Ⓒ4) 9.12% 5) 7.34%arrow_forwardJaiLai Cos. stock has a beta of 0.7, the current risk-free rate is 6.1 percent, and the expected return on the market is 11 percent.What is JaiLai’s cost of equity?arrow_forwardCAPM. The common stock of Anthony Steel has a beta of 0.80. The risk-free rate is 5 percent and the market risk premium (rM - rRF) is 6 percent. What is the company’s cost of common stock, rs? Please show your workarrow_forward
- Wild Swings, Inc.'s stock has a beta of 2.1. If the risk-free rate is 5.9% and the market risk premium is 7.1%, what is an estimate of Wild Swings' cost of equity? Wild Swings, Inc.'s cost of equity capital is ______%arrow_forwardThe Swanson Corporation's common stock has a beta of 1.6. If the risk-free rate is 4.7 percent and the expected return on the market is 13 percent, what is the company's cost of equity capital? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Cost of equity capital %arrow_forwardAssume that the risk-free rate is 6.4% and the market return is 8%. Calculate the expected rate of return of a stock with a volatility (beta) of 3%.arrow_forward
- Steady Company's stock has a beta of 0.21. If the risk-free rate is 5.9% and the market risk premium is 6.9%, what is an estimate of Steady Company's cost of equity?arrow_forwardQuestion: BRICS Company has a beta of 0.8. The risk-free rate is equal to 3% and the expected market return is equal to 8%. a. Calculate the required rate of return of this company. b. Calculate the market risk premium. @ c. Calculate the share risk premium.arrow_forwardIf an average share of stock is expected to yield a return of 7.2% and comparable Treasury bonds yield a return of 3.6%, what is the market risk premium? Give your answer in percentage terms to one decimal place аccuracy.arrow_forward
- A stock has a beta of 1.3, and a market risk premium of 8%. The risk-free rate is 4%. What is the expected return on the stock? A. 12.0% B. 14.4% C. 10.4% D. 13.2%arrow_forwardIn an economy where the risk-free interest rate is 19% and the expected return of the market is 25%, the beta coefficients of A, B, C and D stocks and the expected returns announced by the companies are as follows. According to the Financial (Capital) Assets Pricing Model c) Calculate the expected return rates of the shares.d) Determine which stocks can be invested by comparing the expected return announced by the company with the expected return you calculated.arrow_forwardB24&Co stock has a beta of 1.66, the current risk-free rate is 3.16 percent, and the expected return on the market is 10.66 percent. What is B24&Co's cost of equity?arrow_forward
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