Assume that the risk-free rate is 3.5% and the required return on the market is 11%. What is the required rate of return on a stock with a beta of 2? Round your answer to two decimal places

Q: Assume that the risk-free rate is 2.5% and the required return on the market is 8%. What is the…

A: According to capital assets pricing model, The expected return on equity stock is calculated as…

Q: beta of 1.40 and an expected return of 19%. Stock Z has a beta of 0.65 and an expected return of…

A: We need to compute expected return using CAPM (Capital asset pricing model) for each stock. CAPM…

Q: A stock's beta is 1.8 and the market risk premium is 6.6%.  If the risk-free rate is 3.1%, what is…

A: The risk premium refers to the extra return over the risk-free rate that the stock provides for its…

Q: A stock has an expected return of 12.4%, the risk-free rate is 6.5%, and the market risk premium is…

A: In the given problem we require to calculate the Beta of the stock using following details: Expected…

Q: Stock R has a beta of 1.5, Stock S has a beta of 0.95, the required return on an average stock is…

A: Required rate of return is defined as the minimum return regarding an investor, which is used to…

Q: Stock Y has a beta of 0.6 and an expected return of 8.89 percent. Stock Z has a beta of 2.1 and an…

A: The below expression can be used to calculate the risk-free rate:

Q: Assume that you run a regression on the raw returns of the stock of Company J against the raw…

A: > Jensen's Alpha is a measure of a stock's risk-adjusted performance, which compares the stock's…

Q: Johnson Corporation stock has a beta of 0.74. What is its expected return?

A: As per the Capital Asset pricing model expected return can be calculated using the formula given…

Q: Suppose that you observe the following information in Table 2 for stocks A and B: Table 2 Expected…

A: The market risk premium is the excess of the expected return on the benchmark index over 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 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: Stock A has a beta of 1.62 and an expected return of 19.1 percent. Stock B has a beta of 1.02 and an…

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

Q: Suppose the risk-free return is 4.2% and the market portfolio has an expected return of 11.4% and a…

A: Expected return = Risk free rate + beta * (market return -risk free rate )

Q: Assume that you run a regression on the raw returns of the stock of Company J against the raw…

A: Jensen’s alpha is an important metric in the world of investments. This metric shows the quantum of…

Q: A stock has a beta of 1.61, the expected return on the market is 0.07, and the risk-free rate is…

A: Return on stock :— It is the rate of return expected by the investors of stock.    According to CAPM…

Q: A certain stock has a beta of 1.3. If the risk-free rate of return is 3.9 percent and the market…

A: Expected return on a stock implies the returns expected on a stock after taking into consideration…

Q: Assume the expected return on the market is 7 percent and the risk-free rate is 4 percent. a. What…

A: In the given question we have two parts: In Part (A) we need to compute expected return for a stock…

Q: Stock R has a beta of 1.5, Stock S has a beta of 0.85, the required return on an average stock is…

A: Investors want to be compensated for risk and time worth of money. The risk-free rate in the CAPM…

Q: A stock has a beta of 0.73, the expected return on the market is 0.08, and the risk-free rate is…

A: To calculate the expected return on the stock by using the capital of surprising model we use the…

Q: Assume that the risk-free rate is 6% and the required return on the market is 10%. What is the…

A: The formula used as follows: Required rate of return=rRF+Beta rM-rF

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

A: Introduction: Capital asset pricing model is the widely used financial model which is used in…

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

A: CAPM describes the relationship between systematic risk and expected return for assets, particularly…

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: The stock market can have three potential returns with the following probabilities. Note "otherwise"…

A: Otherwise probability= 1- (0.24+0.38) = 0.38Expected return = (0.24*-0.04( + (0.38*0) + (0.38*0.18)=…

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: Stock R has a beta of 1.4, Stock S has a beta of 0.95, the expected rate of return on an average…

A: The required return of the stock is calculated using the Capital asset pricing model(CAPM ).    The…

Q: Stock A has a beta coefficient = 1.12. calculate the expected rate of return of the stock A given…

A: Solution:- Capital Asset Pricing Model (CAPM) is the model to calculate expected return on a stock.…

Q: A stock has an expected return of 16.4%, its beta is 1.3, and the expected return on the market is…

A: Following details are given to us in the question: Expected return of stock = 16.4% Beta = 1.3…

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: Stock R has a beta of 2.0, Stock S has a beta of 0.75, the required return on an average stock is…

A: Given, The Beta of Stock R is 2 The beta of stock S is 0.75 Average stock return is 14% Risk free…

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: How do you find the market risk premium and market expected return given the expected return of…

A: The rate of return earned by the investor over the risk-free rate of return is considered as market…

Q: Required Rate of Return Stock R has a beta of 1.8, Stock S has a beta of 0.35, the expected rate of…

A: Beta coefficient shows the systematic risk of the assets. The beta factor shows the systematic risk…

Q: b) Suppose that you observe the following information in Table 2 for stocks A and B: Table 2…

A: Single index model: Ri=αi+βiRm+ei Ri=excess return over risk free rate

Q: A stock has an expected return of 9.7 percent, its beta is .89, and the risk-free rate is 2.9…

A: Capital Asset Pricing Model (CAPM) is used to determine the required return on a stock which is the…

Q: You have estimated the following probability distributions of expected future returns for Stocks X…

A: Expected return of a stock refers to the amount of profit or loss that an investor can incur on his…

Q: A stock has a beta of 1.08, the expected return on the market is 0.09, and the risk-free rate is…

A: Here, Beta = 1.08 Expected return on the market = 0.09 Risk-free rate = 0.06 To Find: Expected…

Q: Stock R has a beta of 1.5, Stock S has a beta of 0.85, the required return on an average stock is…

A: The objective of the question is to find out the difference in the required returns of two stocks…

Q: *Stock A has a beta of 1.3 and an expected return of 10.2. Stock B has a beta of 0.8 and an expected…

A: Given, Stock A has beta of 1.3 and Expected return of 10.2 Stock B has beta of 0.8 and expected…

Q: Stock R has a beta of 2.5, Stock S has a beta of 0.65, the required return on an average stock is…

A: The Beta of Stock R is 2.5 The beta of stock S is 0.65 Average stock return is 14% Risk free rate is…

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: Give typing answer with explanation and conclusion  the expected return on stock A is 11.35%. the…

A: CAPM stands for capital asset pricing model. It is a very important theoretical concept in finance.

Q: A stock has an expected return (rs) of 10.4%, the risk-free rate (fer) is 1.7%, and market risk…

A: Capital Asset Pricing Model (CAPM) is an alternative model to find out the expected return of stock…

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: You are trying to figure out the risk-free rate estimate.  Here is information about a stock's CAPM…

A: As per the CAPM model return can be calculated as under. Stock Return = Risk free Return + (Return…