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: 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: stock has a required return of 8%, the risk-free rate is 3.5%, and the market risk premium is 3%. a.…

A: CAPM is an abbreviation used for Capital asset pricing model. This model is used to determine the…

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: Suppose that the index model for stocks A and B is estimated from excess returns with the following…

A: Standard deviation of stock = wherei is stock is beta of stock i is standard deviation of market

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: Given the following information, determine the beta coefficient for Stock L that is consistent with…

A: Given: Required returnr=8%Risk free raterRF=3%Market returnrM=12%

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: c. Calculate each stock's required rate of return. Round your answers to two decimal places. rx = X%…

A: Coefficient of variation = Standard deviation/Mean Required rate of return as per CAPM equstion =…

Q: Given the following information, determine the beta coefficient for Stock L that is consistent with…

A: According to capital asset pricing model Expected return on stock = Risk free rate+Beta×Market…

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 a required return of 7%, the risk-free rate is 2.5%, and the market risk premium is 3%.…

A: Required rate of return as per CAPM  :— Expected Return = Rf + (Rm - Rf) beta of the…

Q: 1 2 3 4 5 Stock A 0.11 0.07 0.14 -0.02 0.07 Stock B 0.06 0.01 0.04 0.02 -0.03 a. What are the…

A: Here, Year Stock A Stock B 1 0.11 0.06 2 0.07 0.01 3 0.14 0.04 4 -0.02 0.02 5 0.07…

Q: Based on the following information: State of Economy Probability of State of Economy Return on Stock…

A: a. Expected Returns Calculation for Stock J and Stock K: To calculate the expected returns, we use…

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: Given the following information, determine the beta coefficient for Stock L that is consistent with…

A: Given: Return = 8% Risk free rate (rRF )= 3% Market rate (rM) = 12%.

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: Suppose that the index model for stocks A and B is estimated from excess returns with the following…

A: Stock A:Beta = 1.1R-square = 0.29Stock B:Beta = 1.2R-square = 0.14σM = 29%

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: Suppose you allocate 2/5 of your portfolio value to a stock that has an expected return of 8% and…

A: Weight of stock 1 (W1) = 40%Weight of stock 2 (W2) = 60%Return of stock 1 (R1) = 8%Return of stock 2…

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: Given the following information, determine the beta coefficient for Stock L that is consistent with…

A: The objective of the question is to calculate the beta coefficient for Stock L. The beta coefficient…

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. What is the market risk premium? Show your work. b. What is the cost of equity for XYZ? Show your…

A: Please note that only 1 question can be solved under the Answering Guidelines. The solution to stock…

Q: Given the following information, determine the beta coefficient for Stock L that is consistent with…

A: According to CAPM, the formula to compute expected rate of return is equals to Expected rate of…

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: Given the following information, determine the beta coefficient for Stock L that is consistent with…

A: The provided information are: Expected returnrL=8%=0.08Risk-free raterRF=3%=0.03Market…

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 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: The index model has been estimated from the excess returns for stock A with the following results:…

A: RA12.00%+1.55Rm+eAσM24.00%σ(eA)18.50%

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: c. What is the present value of the portfolio? (Round your answer to 2 decimal places.) Present…

A: Put Option: A put option provides the buyer the right to exercise the option and benefit from the…

Q: Given the following information, determine the beta coefficient for Stock L that is consistent with…

A: Given: rL = 8%, rRf = 3%, rm = 12%

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: 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: 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)

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.