b) Clarity Homes stock has a beta of 1.46. The risk-free rate of return is 3.07 percent and the market rate of return is 11.81 percent. What is the amount of the risk premium on the stock?
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- 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 the stock's risk premium? Answer:The risk-free rate is 5.6%, the market risk premium is 8.5%, and the stock's beta is 2.27. What is the required rate of return on the stock, E(Ri)?How do you find the market risk premium and market expected return given the expected return of stock, beta, and risk free rate? Example: The expected return of a stock with a beta of 1.2 is 16.2%. Calculate the market risk premium and the market expected return, given a risk-free rate of 3%.
- 1) The risk-free rate is 3.7 percent and the expected return on the market is 12.3 percent. Stock A has a beta of 1.1 and an expected return of 13.1 percent. Is this stock correctly priced? (underpriced or overpriced?)Assume that the risk-free rate is 3.5% andthe market risk premium is 4%. What is the required return for the overall stock market?What is the required rate of return on a stock with a beta of 0.8?A stock has a beta of 1.38. The risk free rate is 0.817% and the market risk premium is 5%. What is the fair return on the stock?
- What are the components of the risk-free rate and What is financial risk? If the standard deviation of a stock’s return is 5% and its expected return is 8%, what it the C.V.?The risk-free rate is 5.6%, the market risk premium is 8.5%, and the stock’s beta is 2.27. What is the required rate of return on the stock, E(Ri)? Use the CAPM equation.A) What expected return should an investor expect from investments in common stock? You are given the following information: Risk free rate of return = 4%; market risk premium = 11%; Beta of the stock (assume CAPM holds) = 0.72. B) Stock A with beta of 0.8 offers a 11% return while stock B with a beta of 1.2 offers a 15% return. What is the risk-free rate? What is the common market return? Assume CAPM holds.
- Question: A stock has an expected return of 9.7 percent, its beta is .89, and the risk-free rate is 2.9 percent. What must the expected return on the market be?Assume that the risk-free and rate is 5.50% and the market risk premium is 7.75%. What is the expected return for the overall stock market (rm)?Jerilu Markets has a beta of 1.05. The risk-free rate of return is 2.64 percent and the market rate of return is 13.42 percent. What is the risk premium on this stock?