Kaiser Aluminum has a beta of 0.70. If the risk-free rate (Rer) is 5.0%, and the market risk premium(RPM) is 7.4%, what is the firm's cost of equity from retained earnings based on the CAPM?Your answer should be between 8.70 and 11.25, rounded to 2 decimal places, with no specialcharacters.

A model that represents the relationship of the required return and beta of a particular asset is…

Answered: Kaiser Aluminum has a beta of 0.70. If…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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2. Required Rate of Return Suppose TRF = 4%, FM 9%, and FA = 8%. (a) Calculate Stock A's beta. Round your answer to one decimal place. - (b) If Stock A's beta were 1.3, then what would be A's new required rate of return? Round your answer to one decimal place. % 22222222 122122222322 2014 25226225 250-50 22 352525 2----- 2015
Suppose rRF = 4%, rM = 11%, and bi = 1.5. What is ri, the required rate of return on Stock i? Round your answer to two decimal places. % 1. Now suppose rRF increases to 5%. The slope of the SML remains constant. How would this affect rM and ri? Both rM and ri will decrease by 1%. Both rM and ri will remain the same. Both rM and ri will increase by 1%. rM will remain the same and ri will increase by 1%. rM will increase by 1% and ri will remain the same.
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Kaiser Aluminum has a beta of 0.70. If the risk-free rate (Rs) is 5.0%, and the market risk premium (RPM) is 7.4%, what is the firm's cost of equity from retained earnings based on the CAPM? Your answer should be between 8.70 and 11.25, rounded to 2 decimal places, with no special characters.
The Penny Corporation's common stock has a beta of 1.8. If the risk-free rate is 6.9% and the expected return on the market is 20%, what is the company's cost of equity capital? (Do not round intermediate calculations. Enter answer as a percent rounded to 2 decimal places.)
Your estimate of the market risk premium is 6%. The risk-free rate of return is 4% and General Motors has a beta of 1.4. What is General Motors' cost of equity capital? A. 13.0% B. 12.4% C. 11.8% D. 11.2%
Cooley Company's stock has a beta of 1.05, the risk-free rate is 2%, and the market risk premium is 4%. What is the firm's required rate of return?
Dhofar Energy Services has a Beta = 1.04 The risk-free rate on a treasury bill is currently 4.4% and the cost of equity has 20.70%. What is the market return? Select one: a. 0.2007 b. 0.2088 c. 0.2402 d. All the given choices are not correct e. 1.1567
Fisher Corp has a beta value of 0.5. If the risk free rate is 2.5% and the Market Risk Premium is 11.0%, what is the Expected/Required return on Fisher Corp's stock? Using the Capital Asset Pricing Model, calculate the expected / required rate of return. (Enter your answer as a percentage, not in decimal form. E.g. 15% should be entered as 15.00 and not as 0.15.)

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Kaiser Aluminum has a beta of 0.70. If the risk-free rate (Rer) is 5.0%, and the market risk premium (RPM) is 7.4%, what is the firm's cost of equity from retained earnings based on the CAPM? Your answer should be between 8.70 and 11.25, rounded to 2 decimal places, with no special characters.