Father Time asks us what is the expected return on asset A if it has a beta of .75, the expected market return is 12%, and the risk- free rate is 4%? A. 6.0% B. 6.5 C. 7.0 D. 8.0 E. 10.0
Q: Compute the expected rate of return on investment i given the followinginformation: Rf = 8%; E(RM) =…
A: Expected rate of return is the minimum return which the investors would require for investing in a…
Q: Given the current risk-free rate is 9% and the market return is 12%. Investment Beta A 0.65 1.12…
A: The required rate of return represents the minimum return investors willing to accept for the given…
Q: Your estimate of the market risk premium is 5%. The risk-free rate of return is 4%, and JB Hi Fi has…
A: Market Risk Premium = 5% Risk Free Rate = 4% Beta = 1.5
Q: Assume that the risk free rate is currently 3% and that the market retunr is currently 11%.…
A: The market risk premium and required return for securities can be calculated with the help of CAPM…
Q: You estimate of the market risk premium is 7%. The risk-free rate of return is 3.1 % and General…
A: In the given question we are require to calculate the expected return of General Motors from the…
Q: Consider an economy where Capital Asset Pricing Model holds. In this economy, stocks A and B have…
A: In this we have to use capital assets pricing formula.
Q: Security X has an expected rate of return of 13% and a beta of 1.15. The risk-free rate is 5% and…
A: Overpriced securities are those securities whose required rate of return is more than the expected…
Q: Assume that the risk-free rate, RF, is currently 8%, the market return, RM, is 12%, and asset A has…
A: Hello. Since your question has multiple sub-parts, we will solve first three sub-parts for you. If…
Q: Monroe Mclntyre has estimated the expected return for Bruehl Industries to be 9.45%. He notes the…
A: The Capital Asset Pricing Model (CAPM) refers to the model which tells us how the financial markets…
Q: There is one investment and there are two different two probabilities. If the investment is in bust…
A: Given: Bust probability = 50% Expected return in bust = $100 Boom probability = 50% Expected return…
Q: Assume that the risk-free rate of return is 4% and the market risk premium (Le., Rm- R:) is 896. If…
A: Financial management consists of directing, planning, organizing and controlling of financial…
Q: The Treasury bill rate is 6%, and the expected return on the market portfolio is 10%. According to…
A: Expected Return on Market = 10% Risk free Rate = 6%
Q: Asset A has an expected return of 22.8% and a beta of 1.8. The expected market return is 14%. What…
A: The risk free rate can be calculated as per the capital asset pricing model.
Q: Using the equation for the capital asset pricing model, calculate the (A) Find beta when required…
A: This Question has two parts. In part A we need to calculate Beta and In part B we need to calculate…
Q: Assume that the risk-free rate, RF, is currently 8%, the market return, RM, is 12%, and asset A has…
A: according to sml equation: expected return=rf+beta×rm-rfwhere,rf= risk free raterm= market return
Q: Suppose the risk free rate (rfr) = 5%, average market return (rm) = 10%, and the required or…
A: Expected return = Risk free rate + beta * (market return - risk free rate )
Q: CAPM: The Treasury bill rate is 5%, and the expected return on the market portfolio is 12%. On the…
A: Risk premium = Expected return on market portfolio - Treasury bill rate Risk premium on investment =…
Q: Assume that the risk-free rate of return is 4% and the market risk premium (i.e., Rm - Rf) is 8%. If…
A: Financial statements are statements which states the business activities performed by the company .…
Q: If the expected rate of return on AZNG is 12.72, its beta is 1.09 and the market risk premium is 8%,…
A: Given risk free rate = 6.00%beta =1.090Return of stock =12.72%Market risk premium = 8.00%
Q: e Treasury bill rate is 6%, and the expected return on the market portfolio is 14%. According to the…
A: We need to use CAPM to calculate required rate of return. The equation Required rate of return =Risk…
Q: Assuming a risk-free rate of 8 percent and a market return of 12 percent, would it be wise for…
A: The fundamental rate of return is calculated by using the CAPM approach. In this approach, the…
Q: An analyst has modeled the stock of Crisp Trucking using a two-factor APTmodel. The risk-free rate…
A: Factor 1: Risk premium r1p =Expected return of factor 1 - Risk free rate Risk premium r1p = (12% -…
Q: A project with a beta of 1.50, risk-free rate 7%, and the return on the market portfol ually…
A: In this we need to find out the required rate by capital asset pricing model.
Q: What is the expected risk-free rate of return if asset X, with a beta of 1.5, has an expected return…
A: The risk free rate of return can be calculated with the help of CAPM equation
Q: Assume that the short-term risk-free rate is 3%, the market index S&P500 is expected to pay returns…
A:
Q: An analyst has modeled the stock of Crisp Trucking using a two-factor APT model. The risk-free rate…
A: A single factor APT can be extended further to contain more number of independent risk factors that…
Q: Assume that the risk-free rate of return is 4% and the market risk premium (i.e., Rm - R) is 8%. If…
A: Given: Risk free rate of return =4%Market risk premium =8%Beta =1.28
Q: If the return on the risk-free asset is 2.25% (Rf = 2.25%) and the market return is 6.50% (Rm =…
A: Beta shows magnitude of systematic risk related to stock. It shows volatility in stock returns over…
Q: Puji International Freight Company (PIFC) wishes to determine the required return on Asset J, which…
A: Asset Risk: In the context of investments, investment risk may be described as the possibility or…
Q: Assume that the risk-free rate, RF, is currently 8%, the market return, RM, is 12%, and asset A has…
A: The question is based on calculation of security market line and Capital asset pricing model. The…
Q: The Treasury bill rate is 6%, and the expected return on the market portfolio is 12%. According che…
A: Given information : Treasury bill rate = 6% Expected return on market portfolio = 12% And, CAPM…
Q: What is the expected return on asset A if it has a beta of 0.5, the expected market return is 13%,…
A: The expected return on the asset can be calculated as per capital asset pricing model.
Q: A project has an assigned beta of 1.24, the risk-free rate is 3.8%, and the market rate of return is…
A: In the given question we are required to calculate the project's expected rate of return form the…
Q: the capital asset pricing model.
A: The Capital Asset Pricing Model (CAPM) is a very popular model used in finance to describe the…
Q: Use the basic equation for the capital asset pricing model (CAPM) to find the required return for an…
A: Following is the answer to the question
Q: The Treasury bill rate is 6%, and the expected return on the market portfolio is 10%. According to…
A: Since you have asked a question with multiple parts, we will solve the first 3 parts for you. Please…
Q: If the beta of Asset A is 2.2, the risk free rate is 2.5%, and the expected return on Asset A is 8%,…
A: Expected return on market refers to the money that is invested for expecting to make an investment…
Q: In an economy where the Capital Asset Pricing Model(CAPM) holds, the riskfree interest rate is 1%.…
A: Risk free rate = 1% Expected Return of Market = 16% Standard Deviation = 20% Porfolio Return = 25%…
Q: a. Calculate the required rate of return for an asset that has a beta of 1.8, given a risk-free rate…
A: Investors have different options to make investments, and the motive behind investments is to…
Q: The market risk premium is 15% and the risk-free rate is 5%. The beta of Asset D is 0.2. What is…
A: Following details are given in the question: Beta of Asset D = 0.2 Market Risk premium = 15% Risk…
Q: d) Assume that the short-term risk-free rate is 3%, the market index S&P500 is expected to pay…
A:
Q: Find the market return for an asset with a required return of 15.996% and a beta of 1.10 when the…
A: Given information: Required return = 15.996% Beta = 1.10 Risk free rate = 9%
Q: What is the expected market return if the expected return on asset A is 19% and the risk free rate…
A: A model that represents the relationship of the required return and beta of a particular asset is…
Q: Within the context of the capital asset pricing model (CAPM), assume:∙ Expected return on the market…
A: Capital asset pricing model (CAPM) represents the relationship between the risk and return of an…
Q: What is the required return on an investment with a beta of 1.3 if the riskfree rate is 2.0 percent…
A: CAPM evolved as a way to measure this systematic risk. Sharpe found that the return on an individual…
Q: Assume that the risk-free rate, RF, is currently 8%, the market return, RM, is 12%, and asset A has…
A: Security market line (SML) is a graphical representation of how the approach of the capital asset…
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- Asset A has an expected return of 10%. The expected market return is 14% and the risk-free rate is 5%. What is asset A's beta? Select one: O a. 0.88 O b.0.67 O C. 0.55 O d.o.33 O e. 1.15What is the expected return of a portfolio of two risky assets if the expected return E(Ri), standard deviation (SDi), covariance (COVij), and asset weight (Wi) are as shown below? Asset (A) E(R₂) = 25% SDA = 18% WA = 0.75 COVA, B = -0.0009 Select one: A. 13.65% B. 20 U ODN 20.0% C. 18.64% D. 22.5% Asset (B) E(R₂) = 15% SDB = 11% WB = 0.25APT An analyst has modeled the stock of Crisp Trucking using a two-factor APT model. The risk-free rate is 6%, the expected return on the first factor (r1) is 12%, and the expected return on the second factor (r2) is 8%. If bi1 = 0.7 and bi2 = 0.9, what is Crisp’s required return?
- Supposing the return from an investment has the following probability distribution Return Probability R (%) 8 0.2 10 0.2 12 0.5 14 0.1 Required: What is the expected return of the investment? What is the risk as measured by the standard deviation of expected returns?What is the expected return on asset A if it has a beta of 0.5, the expected market return is 13%, and the risk-free rate is 3%? O 6.5% 8% 9.5% 7% O 5%If the beta of Asset A is 2.2, the risk free rate is 2.5%, and the expected return on Asset A is 8%, what is the expected return on the market (Note: you want to use CAPM)? Group of answer choices 7.28% 5.00% 8.00% 16.80%
- What is the expected return of a portfolio of two risky assets if the expected return E(Ri), standard deviation (SDi), covariance (COVij), and asset weight (Wi) are as shown below? Asset (A) E(R₂) = 10% SDA = 8% WA = 0.25 COVAB = 0.006 Select one: A. 13.75% B. 7.72% C. 12.5% D. 8.79% Asset (B) E(RB) = 15% SDB = 9.5% WB = 0.754. Suppose that there are 2 assets with ri 012 = 0.005. = 0.20, 01 = = 0.40, 2 = 0.10, 02 = 0.25 and (a) If ro = 0.02, what are the market portfolio return and variance? What are the corre- sponding weights (i.e. how much to invest in asset 1, asset 2, and the risk-free asset to get the market portfolio)? Answer. (b) If ro 0.05, what are the market portfolio return and variance? What are the corre- sponding weights? Answer.Asset A has an expected return of 22.8% and a beta of 1.8. The expected market return is 14%. What is the risk-free rate? 0.6% O1.2% 3.0% 4.0% 6.0%
- For each 1% change in the market portfolio's excess return, the investment's excess return is expected to change by due to risks that it has in common with the market. ..... А. 1% В. beta C. alpha D. 0%Assume that you are given the following historical returns for the Market and Security J. Also assume that the expected risk-free rate for the coming year is 4.0 percent, while the expected market risk premium is 15.0 percent. Given this information, determine the required rate of return for Security J for the coming year, using CAPM. Year 1 2 O21.20% 3 4 5 6 O22.34% O 23.49% O24.63% O24.10% Market 10.00% 12.00% 16.00% 14.00% 12.00% 10.00% Security J 12.00% 14.00% 18.00% 22.00% 18.00% 14.00%Required Return If the risk-free rate is 10.2 percent and the market risk premium is 4.4 percent, what is the required return for the market? Multiple Choice A. 5.8% B. 4.4% C. 14.6% D. 10.2%