AmDa’s common stock has a beta of 1.4. The market risk premium is 5% and the risk-free rate is 2%. What is the required rate of return on this stock according to CAPM?

Q: Assume that the risk-free rate of return is 4% and the market risk premium (i.e., Rm- R;) is 89%. If…

A: Financial management consists of directing, planning, organizing and controlling of financial…

Q: Assume rhat the risk-free rate is 5.5% and the market rate  premium is 6%. A) What is the required…

A: As per CAPM, Required rate of return = Risk free Rate + (beta * Market Risk premium)

Q: A stock has a beta of 1.78 The risk free rate is 1.314% and the market risk premium is 5% What is…

A: Fair return on stock :— It is the sum of risk free rate of return and beta multiplied with market…

Q: CAPM Elements Risk-free rate (RF) Market risk premium (RPM) Happy Corp. stock's beta Required rate…

A: The capital asset pricing model aids analysts and investors in calculating the expected return on…

Q: Crane Industries, common stock has a beta of 1.5. If the current risk-free rate is 3.6 percent and…

A: The cost of common stock is the cost of issuing the equity capital of the company. The cost of…

Q: A stock has a required return of 15%; the risk- free rate is 2.5%, and the market risk premium is…

A: In this question we have two parts : In part (a) we need to calculate Stock's Beta  In part (b) we…

Q: Assume that expected return of the stock A in your portfolio is 14.6%. The risk premium on the…

A: CAPM is a financial model which shows the relation between risk and expected return of the…

Q: The expected return for a stock, calculated using the CAPM is 13.5%. The risk free rate is 7.5% and…

A: In the given problem we are required to calculate the implied return on market using following…

Q: Industry stock has a beta of 1.8, the risk-free rate is 4.40%, and the market risk premium (MRP) is…

A: CAPM stands for Capital Asset Pricing Model which indicates the relation between the expected…

Q: Assume that the risk-free rate of return is 4% and the market risk premium (Le., Rm- R:) is 896. If…

A: Financial management consists of directing, planning, organizing and controlling of financial…

Q: The expected return for a stock, calculated using the CAP M is 10.5%. The market free return is 9.5%…

A: In the given question we are require to calculate the risk free rate : We can calculate the risk…

Q: jerilu markets has a beta of 1.23 the risk free rate of return is 2.10 percent and the market rate…

A: Step 1 The investment return that an asset is anticipated to generate over and above the risk-free…

Q: Assume a stock has a required return on equity, ?? = 12%. The risk-free rate is ?? = 5% and the…

A: The mathematical equation for the concept is:

Q: Assume the following data for a stock: Risk - free rate market) == 1.5; beta (size) = 0.3; beta…

A: To calculate the expected return on the stock using the Fama-French three-factor model, we need to…

Q: Assume that the risk-free rate is 6.5% and the market risk premium is 5%. What is the required…

A: Solution:-Capital Asset Pricing Model (CAPM) is a model which gives a formula to calculate the…

Q: A stock has a beta of 1.9. The risk-free rate is 2%. Assume that the CAPM holds. What is the…

A: According to CAPM (Capital asset pricing model) ,k =Rf+[ b*(Rm-Rf)]wherek= expected return for the…

Q: A stock has a required return of 13%; the risk-free rate is 3%, and the market risk premium is 4%.…

A: In the given question we are require to calculate the Beta of stock We can calculate the Beta of…

Q: A stock has an expected return of 7.8 percent. The expected return on the market is 9 percent and…

A: Beta less than 1 signifies less systematic risk.

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: The risk-free rate of return is 3.7 percent and the market risk premium is 6.2 percent. What is the…

A: The given question can be solved using capital asset pricing model (CAPM)

Q: The stock of Wiley United has a beta of 0.92. The market risk premium is 8.6% and the risk-free rate…

A: Given the following information: Beta: 0.92 Market risk premium: 8.6% Risk free rate: 2.2%

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: What is the required return for the overall stock market? Round your answer to two decimal p % What…

A: Beta signifies how the systematic risk and the expected return of an investment are related to each…

Q: You are using the CAPM to calculate a fair return for Stardust Inc. common stock. The market has a…

A: Beta is the measure of the systematic risk of a stock. It measures the volatility of the stock with…

Q: Assume that the risk-free rate of return is 46 and the market risk premium (ie., Rm- R) is 8%. If…

A: Cost Accounting: It is the process of collecting, recording, analyzing the cost, summarizing cost,…

Q: A stock has an expected return of 14.1 percent, a beta of 1.8, and the return on the market is 9.8…

A: Expected return (Re) = 14.1% Beta (B) = 1.8 Market return (Rm) = 9.8% Risk free rate = Rf

Q: Assume that the risk-free rate is 7.5% and the required return on the market is 13%. What is the…

A: In the Given Question we require to calculate the required rate of return on a stock using following…

Q: According to the CAPM, what is the required rate of return for a stock with a beta of 0.7, when the…

A: To calculate the required rate of return we use the below formula   Required rate of return = Risk…

Q: The risk-free rate of return is 2.5%, the required rate of return on the market is 11.5%, and ABC…

A: The Capital Asset Pricing Model (CAPM) is the model which shows the relationship between the…

Q: A stock has a beta of 1.2. The risk-free rate is 4%. Assume that the CAPM holds. A.  What is the…

A: Beta = 1.2Risk-free rate = 4%Capital Asset Pricing Model holds.

Q: The risk-free rate of return is 3.75 percent and the market risk premium is 6.5 percent. What is the…

A: Risk free rate of return = rf = 3.75% Market risk premium = mrp = 6.5% Beta = b = 0.84

Q: Company A has a beta of 0.9 , while Company B's beta is 1.4 . The market risk premium is 13.78 %,…

A: The Capital Asset Pricing Model (CAPM) illustrates the relationship between systematic risk, or the…

Q: The following graph plots the current security market line (SML) and indicates the return that…

A: 1.)Rf will also be 2 percent higher if the inflation rate increases by 2 percent. We also know that…

Q: The risk-free rate of return is currently 0.03, whereas the market risk premium is 0.04. If the beta…

A: Following details are given in the question: Risk free rate of return = 0.03 = 3% Market Risk…

Q: A stock has an expected return of 16 percent, its beta is 0.6, and the risk-free rate is 6.4…

A: Given the following information: Expected return on stock (r) = 16% Beta (b) = 0.6 Risk free rate…

Q: The risk-free rate is 5.6%, the market risk premium is 8.5%, and the stock's beta is 2.27. What is…

A: The question can be answered by determining the required rate of return on the stock using the…