Find the Beta for Stock Y given the Expected Return of Stock Y is 18.4% The expected return on the Market Portfolio is 28.4% and Risk-Free Rate is 4.5 %. Select one: O a. 0.60 O b. 0.90 O c. None O d. 0.56 O e. 0.80

Find the Beta for Stock Y given the Expected Return of Stock Y is 18.4% The expected return on the Market Portfolio is 28.4% and Risk-Free Rate is 4.5 %. Select one: O a. 0.60 O b. 0.90 O c. None O d. 0.56 O e. 0.80

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter2: Risk And Return: Part I

Section: Chapter Questions

Problem 12P: Stock R has a beta of 1.5, Stock S has a beta of 0.75, the expected rate of return on an average...

See similar textbooks

Related questions

Q: beta of 1.40 and an expected return of 19%. Stock Z has a beta of 0.65 and an expected return of…

A: We need to compute expected return using CAPM (Capital asset pricing model) for each stock. CAPM…

Q: Stock R has a beta of 1.8, Stock S has a beta of 0.65, the expected rate of return on an average…

A: Required rate of return = risk free rate +(beta * market risk premium)

Q: c) Assume that using the Security Market Line (SML) the required rate of return (Ra) on stock A is…

A: We’ll answer the first question since the exact one wasn’t specified. Please submit a new question…

Q: Suppose Intel stock has a beta of 0.81, whereas Boeing stock has a beta of 1.11. If the risk-free…

A: Here, Beta of I Stock is 0.81 Beta of B Stock is 1.11 Risk Free Interest Rate is 5.2% Expected…

Q: Assume you have invested in two other stocks: Stock A has a beta of 1.20 and Stock B has a beta of…

A: Given data for stock A: risk free rate (Rf) = 2 % market return ( Rm) = 12% Beta = 1.20 Using CAPM…

Q: The expected return for a stock, calculated using the CAPM is 13.5%. The risk free rate is 7.5% and…

A: In the given problem we are required to calculate the implied return on market using following…

Q: Industry stock has a beta of 1.8, the risk-free rate is 4.40%, and the market risk premium (MRP) is…

A: CAPM stands for Capital Asset Pricing Model which indicates the relation between the expected…

Q: The expected return for a stock, calculated using the CAP M is 10.5%. The market free return is 9.5%…

A: In the given question we are require to calculate the risk free rate : We can calculate the risk…

Q: Please help me with 11-6 ??‍♀️

A: Introduction : Risk free rate =4% Market risk premium = 5% Beta coefficient =2.0 Using CAPM…

Q: Company A has a beta of 0.70, while Company B's beta is 0.95. The required return on the stock…

A: A Beta = 0.70 B Beta = 0.95 Required return on market = 11% Risk free rate = 4.25%

Q: Assume you have invested in two other stocks: Stock A has a beta of 1.20 and Stock B has a beta of…

A: Required return calculation is wrong. Correct solution is provided below.…

Q: If a given stock in the portfolio had established 1.23 beta; the related expected return is at…

A: Part A: The expected return on the portfolio as follows: = Weight of stock ×Expected return on Stock…

Q: Assuming that the CAPM approach is appropriate, compute the required rate of return for each of the…

A: Given: Risk free rate = 0.07 Market rate = 0.13 Different betas:

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 beta of 0.8 and an expected return of 10.6 percent. If the risk-free rate is 2.7…

A: Given: Beta =0.8Expected return =10.6% Risk free rate =2.7%

Q: Stock X has a 10% expected return, a beta coefficient of0.9, and a 35% standard deviation of…

A: “Hey, since your question has multiple sub-parts, we will solve first three sub-parts for you. If…

Q: Suppose that the risk-free rate ry = 0.03, the expected market return µM = 0.11, and the market…

A: Hi There, thanks for posting the question. But as per Q&A guidelines, we must answer the first…

Q: Stock A has an expected return of 10 percent and a beta of 1.0. Stock B has a beta of 2.0. Portfolio…

A: CAPM stands for capital asset pricing model. It explains the relationship between systematic risk…

Q: Stock R has a beta of 1.4, Stock S has a beta of 0.95, the expected rate of return on an average…

A: The required return of the stock is calculated using the Capital asset pricing model(CAPM ). The…

Q: What is the required return on a stock with a beta of -0.20 given a risk-free rate of 2.75% and an…

A: Stock investments are the investments that are made by investors in the stocks of a corporation,…

Q: Stock X and Stock Y has following distribution: Stock X: expected return of 10%, a beta coefficient…

A: (iv) Here the expected return should be greater than the required rate. We should select stock Y…

Q: A stock has a beta of 1.68, the expected return on the market is 14.72, and the risk-free rate is…

A: As per CAPM formula Expected return on stock = Risk free return + Beta*(Market return-Risk free…

Q: Required Rate of Return Stock R has a beta of 1.8, Stock S has a beta of 0.35, the expected rate of…

A: Beta coefficient shows the systematic risk of the assets. The beta factor shows the systematic risk…

Q: Suppose Autodesk stock has a beta of 2.16, whereas Costco stock has a beta of 0.69. If the risk-free…

A: The expected return of the portfolio can be calculated by computing the Portfolio Beta and applying…

Q: Compute the expected rate of return for Intel common stock, which has a 1.2 beta. The risk-free rate…

A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: Stock A has a beta of 1.5, the risk-free rate is 4% and the return on the market is 9%. If…

A: Required rate of return is the minimum rate that an investor expects from their investment over the…

Q: Assume that using the Security Market Line (SML) the required rate of return (RA) on stock A is…

A: Because you have posted multiple questions, we will answer the first question only, for the…

Q: Suppose that the index model for stocks A and B is estimated from excess returns with the following…

A: Given: RA = 4.0% + 0.50RM + eA RB = –1.2% + 0.70RM + eB σM = 17% R-squareA = 0.26 R-squareB = 0.18…

Q: Stock A has expected return of 15% and standard deviation (s.d.) 20%. Stock B has expected…

A: The Capital Asset Pricing Model establishes a relationship between systematic risk and expected…

Q: Assume that using the Security Market Line (SML) the required rate of return (RA) on stock A is…

A: “Hey, since there are multiple questions posted, we will answer first question. If you want any…

Q: A certain stock has a beta of 1.2. If the risk-free rate of return is 4.5 percent and the market…

A: Risk-free return = 4.5% Market risk premium = 8% a) Beta = 1.2 b) Beta = 1.08 CAPM formula: Expected…

Q: tfolio P has a beta of 1.0.

A: The beta of the portfolio refers to the weighted sum of the assets of the company according to the…

Q: Stock X has a beta of 0.8 and Stock Y has a beta of 1.2. 50% of Portfolio P is invested in Stock X…

A: Answer - Formula for CAPM i- Rf+beta*risk premium, If there is any increase in premium, it will be…

Q: The expected return on the Market Portfolio M is E(RM)=15%, the standard deviation is sM=25% and the…

A: A portfolio is the combination of various financial assets in which an investor (or individual) has…

Q: Stock A has a beta of 1.30, and its required return is 13.25%. Stock B's beta is 0.90. If the…

A: Given Beta of Stock A = 1.30 Risk free Rate = 4.75% Required return of stock A = 13.25%

Q: Stock A's stock has a beta of 1.25, and its required return is 12.00%. Stock B's beta is 0.90. If…

A: Given Information Stock A's Beta = 1.25 Required return = 12% Stock B's Beta = 0.90 Risk free rate…

Q: Stocks X and Y have the following probability distributions of expected future returns: Calculate…

A: Here, Probability X Y 0.3 90% -35% 0.4 15% 0 0.3 -60% 20 Expected rate of Return of X…

Q: Find the Risk-Free Rate given the Expected Return on Stock Y is 20 %, the Expected Return on Market…

A: Expected return = Risk free rate + beta * (market return - risk free rate )

Q: Suppose Autodesk stock has a beta of 2.17, whereas Costco stock has a beta of 0.71. If the…

A: Autodesk beta = 2.17 Costco beta = 0.71 Risk free rate = 6% Market return = 11.5% Autodesk weight =…

Q: A stock has a beta of 1.2 and an expected return of 11.8 percent. A risk-free asset currently earns…

A: Portfolio weight refers to the holding of all assets or investments. Weight of risk-free asset in a…

Q: Stock A's stock has a beta of 1.30, and its required return is 13.75%. Stock B's beta is 0.80. If…

A: Stock A beta = 1.30 Required return = 13.75% Risk free rate = 2.75% As per formula…

Q: Stock A's stock has a beta of 1.30, and its required return is 15.75%. Stock B's beta is 0.80. If…

A: Given information: Stock A beta is 1.30 Required return is 15.75% Stock B beta is 0.80 Risk free…

Q: Stock A has an expected annual return of 29% and a volatility of 38%. Stock B has an expected annual…

A: Stock A expected return (Ra) = 29% Stock A volatility (Sa) = 38% Stock B expected return (Rb) = 39%…

Concept explainers

Risk and return

Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary.

Capital Asset Pricing Model

Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.

Question

Find the Beta for Stock Y given the Expected Return of Stock Y is 18.4% The expected return on the Market Portfolio is
28.4% and Risk-Free Rate is 4.5 %.
Select one:
O a. 0.60
O b. 0.90
O c None
O d. 0.56
O e. 0.80

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

An analyst has modeled the stock of a company using the Fama-French three-factor model. The market return is 10%, the return on the SMB portfolio (rSMB) is 3.2%, and the return on the HML portfolio (rHML) is 4.8%. If ai = 0, bi = 1.2, ci = 20.4, and di = 1.3, what is the stock’s predicted return?
You have observed the following returns over time: Assume that the risk-free rate is 6% and the market risk premium is 5%. What are the betas of Stocks X and Y? What are the required rates of return on Stocks X and Y? What is the required rate of return on a portfolio consisting of 80% of Stock X and 20% of Stock Y?
Find the Beta for Stock Y given the Expected Return of Stock Y is 18.4% The expected return on the Market Portfolio is 28.4% and Risk-Free Rate is 4.5 %. Select one: a. 0.60 b. 0.56 c. None d. 0.90 e. 0.80
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. 4% b. 5% c. 6% d. 7% e. None
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: a. 7% b. 5% c. None d. 4% e. 6%
Find the required rate of return on the market if: beta is 1.23, required return on the stock is 9.50%, and risk-free rate is 2.30% A. 9.87% B. 8.40% C. 8.15% D. 8.72% E. 8.32%
Find the Expected Return on Market Portfolio given that the Expected Return on Stock Y is 0.156 and Risk Free Rate is 6% and the Beta for Stock Y is 0.5 Select one: a. 0.2520 b. None of the options C. 0.17 d. 0.1320 e. 0.3720
Find the Expected Return on the Market Portfolio given that the Expected Return on Stock Y is 25 % and Risk Free Rate is 4% and the Beta for Stock Y is 0.7. Select one: a. 34% b. None c. 35.50% d. 30.50% e. 33%
Suppose Stock A has B = 1 and an expected return of 11%. Stock B has a B = 1.5. The risk- free rate is 5%. Also consider that the covariance between B and the market is 0.135. Assume the CAPM is true. Answer the following questions: a) Calculate the expected return on share B. b) Find the equation of the Capital Market Line (CML). c) Build a portfolio Q with B = 0 using actions A and B. Indicate weights (interpret your result) and expected return of portfolio Q.
Give typing answer with explanation and conclusion the expected return on stock A is 11.35%. the expected return on stock B is 8.7%. assuming CAPM holds, if the beta of stock A is higher than the beta of stock B by 0.17, what should the risk premium be?
ind the Beta for Stock Y given the Expected Return of Stock Y is 20.4% The expected return on the Market Portfolio is 25.5% and Risk-Free Rate is 4.2 %. Select one: a. 0.50 b. 1.2 c. None d. 1.5 e. 0.76
Stock A's stock has a beta of 1.30, and its required return is 13.75%. Stock B's beta is 0.80. If the risk-free rate is 4.75%, what is the required rate of return on B's stock? (Hint: First find the market risk premium.) Select the correct answer. a. 10.26% b. 10.32% c. 10.29% d. 10.35% e. 10.38%