Distributor Company A wants to determine the required rate of return on a stock portfolio with a beta coefficient of 0.5. Assuming a risk-free rate of 6 percent and a market return of 12 percent, calculate the required rate of return.

You are facing three stock investment alternatives, Stock A, Stock B and Stock C. Given the following information, please indicate which stock is (are) overvalued, which stock is (are) undervalued, and which stock is (are) correctly priced based on the required returns calculation using the Capital Asset Pricing Model (CAPM or Security Market Line=SML). The risk free rate is 3% and the risk premium for the market index return is 5%.  Please Show Work   Expected   Stocks Returns BETA A 14% 1.2 B 8% 0.67 C 20% 2.5

Consider a CAPM economy. The risk free rate (rf ) is 4% and the expected market return (rM )is 10%.  (a) Stock 1: β = 0.90. Compute the expected return of stock 1.  (b) Stock 2: β = 1.1. Compute the expected return of stock 2.  (c) Portfolio 1: The proportions invested in stock 1, stock 2, and risk free asset are 30%, 30%,and 40%, respectively. Compute the beta and expected return of portfolio 1.  (d) Portfolio 2: The proportions invested in stock 1, stock 2, and risk free asset are 50%, 60%,and -10%, respectively. Compute the beta and expected return of portfolio 2.

Suppose you estimate that stock A has a volatility of 32% and a beta of 1.42, whereas stock B has a volatility of 68% and a beta of 0.75. (a) Which stock has more total risk? (b) Which stock has more market risk? (c) Suppose the risk-free rate is 2% and you estimatethe market’s expected return as 10%. Which firm has a higher cost of equity capital?

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In an economy where the risk-free interest rate is 19% and the expected return of the market is 25%, the beta coefficients of A, B, C and D stocks and the expected returns announced by the companies are as follows. According to the Financial (Capital) Assets Pricing Model c) Calculate the expected return rates of the shares.d) Determine which stocks can be invested by comparing the expected return announced by the company with the expected return you calculated.

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Find the Risk-Free Rate given the Expected Return on Stock Y is 20 %, the Expected Return on Market Portfolio is 24 % and Beta for Stock Y is 0.8. Select one: O a. 5% O b. None O c. 6% O d. 4% O e. 7%

The risk-free rate is 1.41% and the expected return on the market 10.36%. A stock with a β of 1.52 will have an expected return of ____%.

Assume that the risk-free rate is 2.8 percent, and that the market risk premium is 4.8 percent. If a stock has a required rate of return of 16.1 percent, what is its beta? Your Answer: Answer