According to the CAPM as stock has a risk premium of 10.4%.  If the risk-free rate is 2.5%, what is the stock's fair return?  Answer as a percent with two decimal places.

Q: A stock has a required return of 12%, the risk-free rate is 2.5%, and the market risk premium is 5%.…

A: The Capital Asset Pricing Model (CAPM) is a model that describes the relationship between the…

Q: a. A market-value-weighted index. b. An equally weighted index.

A: First let us determine the formula to solve the question. In a price weighted index, the index value…

Q: The risk-free rate is 4.15 percent. What is the expected risk premium on this stock given the…

A: Investors have different options to make investments, and the motive behind investments is to…

Q: A stock has an expected return of 13%, its beta is 0.79, and the risk-free rate is 5%. What must the…

A: We require to calculate the expected return on the market in this question using following details:…

Q: What is the CAPM required return for Stock Z, in decimal form? Round your answer to 4 decimal places…

A:

Q: A stock has an expected return of 12.91 percent. The beta of the stock is 1.2 and the risk-free rate…

A: The market risk premium is an important concept when the expected return for the stock is…

Q: A stock has a required return of 13%, the risk-free rate is 6.5%, and the market risk premium is 3%.…

A: Capital Asset pricing Model (CAPM) is used to determine the required rate of return on investment…

Q: Do is currently $2.60, Ke is 8 percent, and g is 4 percent. Under Plan A, Do would be immediately…

A: P0 = D0 ( 1 + g) / (Ke - g) PO= Stock Price today D0 = Current year dividend Ke= Required rate…

Q: Consider the three stocks in the following table. Pt represents price at time t splits two-for-one…

A: Price weighted index:A price-weighted index is a type of stock market index where the individual…

Q: Consider the three stocks in the following table. Pt represents price at time t, and Qt represents…

A: The rate of return refers to the minimum return to be earned by the investor while investing in the…

Q: A stock has a required return of 13%, the risk-free rate is 3%, and the market risk premium is 6%.…

A: Beta means the measure of changes in the stock in connection with the entire market.  Beta is…

Q: a. A B C Po 90 50 100 Qo 100 200 200 P₁ 95 45 110 Q₁ 100 200 200 P₂ 95 45 55 Q₂ 100 200 400…

A: The rate of return refers to the minimum return to be earned by the investor while investing in the…

Q: A stock has an expected return of 17 percent, its beta is 1.35, and the risk-free rate is 4 percent.…

A: CAPM is capital asset pricing model to compute the cost of equity based on company risk index as…

Q: Beta and required rate of return A stock has a required return of 11 percent; the risk-free rate is…

A: In the given question we require to compute the beta of stock from below details : Required return =…

Q: A stock will provide a rate of return of either -29% or 34% If both possibilities are equally…

A: Expected return = summation of [probability ×return]

Q: A stock has a beta of 1.38. The risk free rate is 0.817% and the market risk premium is 5%. What is…

A: Solution:- Capital Asset Pricing Model (CAPM) is the model which helps to compute the fair return on…

Q: Consider the three stocks in the following table. Pt represents price at time t, and Qt represents…

A: StockP0Q0P1Q1P2Q2A $    86.00100 $    91.00100 $  91.00100B $    46.00200 $    41.00200 $  41.00200C…

Q: The expected return on stock A is 11.70 percent. The expected return on stock B is 9.40 percent.…

A: The objective of the question is to calculate the risk premium using the Capital Asset Pricing Model…

Q: Suppose the market risk premium is expected to be 8%, a stock has a beta of 1.16, and the T-bill…

A: The Jensen’s alpha of a stock refers to the abnormal returns that the stock provides over the value…

Q: Consider the three stocks in the following table. Pe represents price at time t, and Qe represents…

A: StocksPrice at time=0Shares outstandingPrice at time= 1Oustsatnding shares at 1Price at time=2Shares…

Q: Consider the three stocks in the following table. Pt represents price at time t, and ot represents…

A: Price-weighted index refers to the index in the stock market which is used for weighting the…

Q: A stock has a beta of 1.2 and an expected return of 11.6 percent. If the risk-free rate is 5.1…

A: Given,  Expected return 11.6 percent. risk-free rate is 5.1 percent

Q: Percentages need to be entered in decimal format, for instance 3% would be entered as .03. That is…

A: Note: Return of the stock is taken what was provided in the previous question. Please adjust the…

Q: A stock has an expected return of 15.9 percent and a beta of 1.70, and the expected return on the…

A: The Capital Asset Pricing Model (CAPM) refers to the model which tells us how the financial markets…

Q: A stock has an expected return of 10.99 percent, the risk-free rate is 2.46 percent, and the market…

A: Expected return = 10.99%Risk-free rate = 2.46%Market risk premium = 4.95%To find: Beta of the stock.…

Q: 4. Consider the three stocks in the following table. P, represents the price at time t, and Q,…

A: The rate of return on a price-weighted index measures the percentage change in the value of the…

Q: The risk-free rate is 1.13% and the market risk premium is 6.26%. A stock with a β of 0.84 will have…

A: Given: Risk free rate = 1.13% market risk premium = 6.26% Beta = 0.84

Q: A stock has a required return of 11%, the risk-free rate is 3.5%, and the market risk premium is 5%.…

A: The objective of the question is to calculate the beta of the stock and to understand the impact of…

Q: Following is information for two stocks:   Investment    r        σ   Stock X        8%     10%…

A: Relative risk can be judged by comparing the coefficient of variation (CV) of both the securities.…

Q: A stock has an expected return of 7.72 percent, the risk-free rate is 2.9 percent, and the market…

A: We can calculate Beta by using the CAPM model as it helps in showing the relationship between the…

Q: A stock has a required return of 9%; the risk- free rate is 4%; and the market risk premium is 3%.…

A: In the given question we are require to calculate the Beta: We can calculate the Beta using Capital…

Q: How do you calcuate the bechmark and historical return for the stock ARKK when the last price listed…

A: Examining historical return can give an understanding into how a security or market has responded to…

Q: 1. Consider the three stocks in the following table. P, represents price at time t, and Q,…

A: a) Market value weighted index is the index where the market value of the individual stocks are…

Q: a. Calculate the rate of return on a price-weighted index of the three stocks for the first period…

A: A price-weighted index is a sort of stock market index in which it assigns member companies a weight…

Q: A stock has a required return of 7%; the risk- free rate is 3.0%; and the market risk premium is 3%.…

A: Following details are given in the question : Required return on stock = 7% Risk free rate = 3%…

Q: Consider the three stocks in the following table. P(t) represents price at time t, and Q(t)…

A: Here, Starting Divisor3P(1)P(2)A $   95.00 $ 95.00B $   45.00 $ 45.00C $ 100.00 $ 50.00

Q: Ο A stock has a required return of 16%, the risk-free rate is 5.5%, and the market risk premium is…

A: To calculate the stock's beta and then determine the effect of an increase in the market risk…

Q: Consider the three stocks in the following table. Pt represents price at time t, and Qt represents…

A: Rate of return is a financial measure of an investment's gain or loss as a percentage of the…

Q: A stock has an expected return of 7.5%. Given a risk-free rate of 4.4% and a market return of 7%,…

A: The calculation of Beta, which is the measure of risk in the business. When we are using the capital…

Q: Use the following information on Stocks X and Y to answer questions 1 through 3 (round to the…

A: Standard deviation= Sqrt (summation of all 3 markets ( return - expected return)^2* probability)

Q: A stock has an expected return of 15.2 percent, the risk-free rate is 3.4 percent, and the market…

A: As per CAPM model, expected return = risk free rate + beta*market risk premium

Q: Consider the three stocks in the following table. Pt represents price at time splits two-for-one in…

A: Rate of return refers to the return earned on the investment made during the life of the project…

Q: A stock has a required return of 13%, the risk-free rate is 2.5%, and the market risk premium is 4%.…

A: Beta shows the risk related to the overall risk of the market and it shows how much volatility is in…

Q: epresents shares outstanding at time t. Stock C splits two-for-one in the last period ( P₁ Q1 P2 QO…

A: rate of return refers to the return earned over the investment amount by the investors which is…

Q: If the interest rate on T Bills is 2% and the market risk premium is 6%, what is the CAPM-implied…

A: interest rate on T-bills or risk free rate is 2% Market risk premium is 6% Beta is 1.25   To Find:…

Q: If an average share of stock is expected to yield a return of 7.2% and comparable Treasury bonds…

A: In this question we need to compute the value of market risk premium.

Q: Consider the three stocks in the following table. Pt represents price at time t, and Qt represents…

A: The rate of return may be a monetary metric utilized to assess the productivity of a venture over a…

Stock Yields

The stock yield is otherwise known as the dividend yield. The dividend yield is an annual payment of the stock dividends to the holder of a firm’s stock. The dividend yield is a financial ratio to measure the value of dividend payout every year for the relative stock price. The yield of a stock is usually shown in a percentage that discloses the expected future earnings from stock depending on the current stock price in the future. Stock yield will change depending on the market fluctuations and in accordance with the market fluctuations, the dividends will be increased or decreased by the firm.