Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Assume that the risk-free rate is 3.5% and the required return on the market is 11%. What is the required
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- A stock has a required return of 7%; the risk- free rate is 3.0%; and the market risk premium is 3%. What is the stock's beta? Round answer to two decimal places.arrow_forwardAssume that the risk-free rate is 7.7% and the market return is 10%. Calculate the expected rate of return of a stock with a volatility (beta) of 3%.arrow_forwardRequired Rate of Return Stock R has a beta of 1.8, Stock S has a beta of 0.35, the expected rate of return on an average stock is 12%, and the risk-free rate is 7%. By how much does the required return on the riskier stock exceed that on the less risky stock? Do not round intermediate calculations. Round your answer to two decimal places.arrow_forward
- Ο A stock has a required return of 16%, the risk-free rate is 5.5%, and the market risk premium is 4%. a. What is the stock's beta? Round your answer to two decimal places. b. If the market risk premium increased to 7%, what would happen to the stock's required rate of return? Assume that the risk-free rate and the beta remain unchanged. Do not round intermediate calculations. Round your answer to two decimal places. I. If the stock's beta is greater than 1.0, then the change in required rate of return will be greater than the change in the market risk premium. II. If the stock's beta is less than 1.0, then the change in required rate of return will be greater than the change in the market risk premium. III. If the stock's beta is greater than 1.0, then the change in required rate of return will be less than the change in the market risk premium. IV. If the stock's beta is equal to 1.0, then the change in required rate of return will be greater than the change in the market risk…arrow_forwardA stock has an expected return of 18.0 percent, a beta of 1.90, and the return on the market is 11.60 percent. What must the risk-free rate be? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Risk-free ratearrow_forwardA stock has a beta of 1.08, the expected return on the market is 0.09, and the risk-free rate is 0.06. What must the expected return on this stock be? Enter the answer with 4 decimals (e.g. 0.1234).arrow_forward
- Stock R has a beta of 1.5, Stock S has a beta of 0.85, the required return on an average stock is 13%, and the risk-free rate of return is 5%. By how much does the required return on the riskier stock exceed the required return on the less risky stock? Round your answer to two decimal places.arrow_forwardStock R has a beta of 2.5, Stock S has a beta of 0.65, the required return on an average stock is 14%, and the risk-free rate of return is 6%. By how much does the required return on the riskier stock exceed the required return on the less risky stock? Round your answer to two decimal places. %arrow_forwardA stock has an expected return of 15.2 percent, the risk-free rate is 3.4 percent, and the market risk premium is 9.3 percent. What must the beta of this stock be? (Do not round intermediate calculations. Round your answer to 2 decimal places.)arrow_forward
- A stock has a required return of 13%, the risk-free rate is 2.5%, and the market risk premium is 4%. What is the stock's beta? Round your answer to two decimal places. Stock's required rate of return will be %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_forwardRequired Rate of Return Suppose rRF = 3%, rM = 8%, and rA = 7%. Calculate Stock A's beta. Round your answer to one decimal place. If Stock A's beta were 1.1, then what would be A's new required rate of return? Round your answer to one decimal place. %arrow_forward
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