estimate that the stock has a required rate of 18%. What is the intrinsic value of this stock?

Q: Suppose rRF = 9%, ľM = 14% and b; = 13 What is r;, the required rate of return on Stock i?

A: Given: Risk free return (rRF)=9%Market returnrM=14%Beta coefficient(bi)=13

Q: Illustrate the impact of changes in the dividend, the growth rate, the expected return on the…

A: The value of a stock is determined by several factors, including the dividend, the growth rate, the…

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 a required return of 13%; the risk- free rate is 5%, and the market risk premium is 4%.…

A: We have two parts in this question : In part (a) we need to calculate Stock's Beta . In part (b) we…

Q: A stock has a beta of 1.78 The risk free rate is 1.314% and the market risk premium is 5% What is…

A: Fair return on stock :— It is the sum of risk free rate of return and beta multiplied with market…

Q: A stock has a required return of 11%, the risk-free rate is 6%, and the market risk premium is 3%.…

A: CAPM states:Re = Rf + B (MRP)Required return =11% Risk free rate= 6% Market risk premium =3%

Q: ASsume the following data for a stock: Beta 15, risk-free rate = 4 percent, market rate of return 12…

A:

Q: How does higher expected growth affect a stock’s value?

A: Stock value is referred to as the shares of the corporation, which used to appear to trade at the…

Q: What does the meaning of maximum and minimum price in the stock performance graph? how to know which…

A: Succinctly summarized, a stock chart is a graph that illustrates the price of a stock over a certain…

Q: he price of a stock is:

A: The price of a stock is the present value of all expected future dividends, discounted at the…

Q: What is the cost of a issuing common stock at S50 if the flotation cost is 2.5%, the beta is 1.3,…

A: The objective of the question is to calculate the cost of issuing common stock given the flotation…

Q: the actual rates of change were 6% for IP and 2% for INT respectively, What is your best guess for…

A: The required rate of return  is the lowest rate of return an investor would take in exchange for a…

Q: The dividend yield (i.e. D1/P0) is a good measure of the expected return on a common stock under…

A: The percentage dividend yield is a financial proportion (dividend/price), indicating how often a…

Q: Find Cost of common stock if risk free rate is 7, beta 1.3 and market return 13%.

A: Data given: Re = Cost of common stock= ? ( Required) Rrf =Risk free rate = 7% β  =  Beta= 1.3 Rm =…

Q: A stock has an expected return of 13.1 percent, its beta is 1.70 and the risk free premium rate is…

A: Risk market return is used in CAPM model to calculate expected return on the stock and it is also…

Q: Beta and required rate of return A stock has a required return of 11 percent; the risk-free rate is…

A: In the given question we require to compute the beta of stock from below details : Required return =…

Q: A stock has a required return of 13%; the risk-free rate is 3%, and the market risk premium is 4%.…

A: In the given question we are require to calculate the Beta of stock We can calculate the Beta of…

Q: If the risk premium on the stock market was 6.96 percent and the risk-free rate was 2.60 percent,…

A: Risk premium of market = 6.96% Risk free rate = 2.60%

Q: A stock has a beta of 1.38. The risk free rate is 0.817% and the market risk premium is 5%. What is…

A: Solution:- Capital Asset Pricing Model (CAPM) is the model which helps to compute the fair return on…

Q: What is the beta of a stock where the expected rate of return is 14%, the market premium is 7%, and…

A: In the given question we are require to calculate the Beta of a stock: We can calculate the Beta of…

Q: One stock valuation model holds that the value of a share of stock is a function of its…

A: Dividend refers to share to total net earnings that is shared by entity with its common…

Q: Based on the table below, what is the expected return of the stock? Probability 0.20 0.10 0.40 0.20…

A: The expected return of the stock refers to the profit that the stock provides on average to the…

Q: What is beta of stock with premium of 12% if the market risk premium is 14%?

A: The risk premium is the difference between the expected market rate and the risk-free rate. It is…

Q: Is the following equation correct for finding the value of a constant growth stock? Explain.

A: Price of stock can be found from the constant growth model of dividend discount method.

Q: Assume that Home Afrika stock has an expected return of 15%, a required rate of return (RRR) of 12%,…

A: To analyze, the stock is a risk for an investor then standard deviation of both the stock.…

Q: ________ is a model for determining the price of a stock, based on a future series of dividends that…

A: The price of a stock can be determined by the present value of dividends paid in the future.

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: A stock has the following projected rates of return (outcomes): 10%, 15%, and 30%. The probabilities…

A: Formulas:

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: 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: Find Cost of common stock if risk free rate is 7, beta 1.3 and market return 13%. Find Cost of…

A: Given:Risk free rate=7Beta=1.3Market return=13%To compute: Cost of common stock

Q: just to make sure: in order to calculate the expected return of stock in our case the Rm is 7% or…

A: Formula for E(R) = Risk-free rate(Rf) + Beta of the stock x (Market Return(Rm) - Risk free rate(Rf))

Q: A stock has a beta of 1 18. The risk free rate is 1964% and the market risk premium is 5% What is…

A: Formula: Expected return = Risk free return + (Beta X Market Risk Premium)

Q: A stock has an expected return of 7.5%. Given a risk-free rate of 4.4% and a market return of 7%,…

A: The calculation of Beta, which is the measure of risk in the business. When we are using the capital…

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 should not buy it since the fair return is greater than the actual return.

A: holding period return is actual return 8%

Q: If an average share of stock is expected to yield a return of 7.2% and comparable Treasury bonds…

A: In this question we need to compute the value of market risk premium.

Q: Stock A has an expected return of 13.52 percent. Stock B has an expected return of 9.24 percent.…

A: The concept in question is based on the Capital Asset Pricing Model (CAPM), a finance theory used to…

Q: A stock has an expected return of 18.00%. The risk-free rate is 1.45% and the market risk premium is…

A: Marker Risk Premium excess return that market offers above risk-free rate. It is compensation to…

Q: How can the model be used to estimate the predicted return ona stock?

A: Predicted rate of return: Predicting a rate of return is the method of calculating future rate of…

Q: How will the change in required return influence the price of a stock? How will the dividend growth…

A: The Gordon growth model calculates the price of the stock by using the dividends, growth rate of…

Q: A stock has a required return of 10%; the risk- free rate is 3.5%, and the market risk premium is…

A: The Capital Asset Pricing Model (CAPM) is the model which shows the relationship between the…

Q: A stock's internal rate of return (IRR) is the discount rate that cause the present value of future…

A: Internal Rate of Return is the rate at which the net present value of the cash flows from an…

Stock Yields

The stock yield is otherwise known as the dividend yield. The dividend yield is an annual payment of the stock dividends to the holder of a firm’s stock. The dividend yield is a financial ratio to measure the value of dividend payout every year for the relative stock price. The yield of a stock is usually shown in a percentage that discloses the expected future earnings from stock depending on the current stock price in the future. Stock yield will change depending on the market fluctuations and in accordance with the market fluctuations, the dividends will be increased or decreased by the firm.