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 6.5% and the market risk premium is 5%. What is the required return for the overall stock market? Round your answer to one decimal place.
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- A 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_forwardA 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_forward
- Assume the Black-Scholes framework. You are given: i. S(t) is the stock price at time t. ii. The stock's volatility is 25%. iii. The continuously compounded expected rate of return is 8%. iv. The stock pays dividends continuously at a rate of 3% proportional to its price. v. The continuously compounded risk-free interest rate is 4%. vi. The current stock price is S (0) 125. Calculate Pr (S (4) > 150 S (2) - 120). Possible Answers A. 0.30 0.40 C 0.65 D. 0.70 0.85arrow_forwardsuppose a risk free rate is 6% and the market premium is 7%. D1 is 1.25 per share and stock beta is 1.15. What is the required return?arrow_forwardAssume that the risk-free rate is 6.5% and the market risk premium is 8%. What is the required return for the overall stock market? Round your answer to one decimal place. % What is the required rate of return on a stock with a beta of 0.6? Round your answer to one decimal place. %arrow_forward
- If the interest rate on T Bills is 2% and the market risk premium is 6%, what is the CAPM-implied expected return on a stock with a beta of 1.25? Enter your answer as a percentage rounded to 2 decimal places.arrow_forwardStock X has a beta of 2.5, Stock B has a beta of 0.65, 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_forwardA stock has an expected return of 11.4%, the risk-free rate is 5.5%, and the market risk premium is 11%. What must the beta of this stock be? (Do not round intermediate calculations. Round your answer to 2 decimal places.)arrow_forward
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