Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Jensen Corp. has an expected excess return of 3% for the coming year. The company's beta is 0.8 and the expected market
a) 6.0%
b) 12.4%
c) 5.4%
d) 15.4%
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- Calculate the required rate of return for Mudd Enterprises assuming that investors expect a 3.4% rate of inflation in the future. The real risk-free rate is 2.0%, and the market risk premium is 6.0%. Mudd has a beta of 1.5, and its realized rate of return has averaged 9.0% over the past 5 years. Round your answer to two decimal places.arrow_forwardSuppose that the rate of return on the market portfolio is 8% and the risk-free rate is 1%. Con- sider a stock with B = 1.3. The firm is expected to have no earnings in the first year (E1 = 0), and then $10 earnings-per-share in the second year (E2 = 10). After that, earnings are expected to grow at a constant annual rate of 8%. The retention ratio is 80% in all periods.arrow_forwardA company has a beta of 0.25. If the market return is expected to be 8 percent and the risk-free rate is 2 percent, what is the company's required return? Multiple Choice __ 1.50 percent ___ 3.50 percent ___ 4.00 percent ___ 13.50 percentarrow_forward
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