Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Measuring Expected Return Assume Mess stock has a beta of 1.2. If the risk-free rate is 7 percent and the market return is 10 percent, what is the expected return of Mess stock?
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- A stock has a beta of 1.1. The expected return on the market is 6.18 percent and the risk free rate is 2%. According to the CAPM model what is the expected return on the stock?arrow_forwardA stock has an expected return of 11.25 percent, a beta of 0.82, and the expected return on the market is 12.5 percent. What must the risk-free rate be?arrow_forwardA stock has a required return of 10%; the risk- free rate is 3.5%, and the market risk premium is 4%. a. What is the stock's beta? b. If the market risk premium increased to 10%, what would happen to the stock's required rate of return?arrow_forward
- Assume that the risk-free rate is 7.5% and the market risk premium is 3%. What is the required return for the overall stock market? Round your answer to one decimal place. _________ % What is the required rate of return on a stock with a beta of 1.8? Round your answer to one decimal place. _____________ %arrow_forwardUsing CAPM A stock has an expected return of 10 percent, its beta is .70, and the risk-free rate is 5.5 percent. What must the expected return on the market be?arrow_forwardA stock's beta equals 1.34. If the risk-free rate is 1.3% and the market risk premium is 5.9%, what return should be required on this stock if the CAPM model holds? O 8.41% O 9.21% O 7.48% O 10.04% Onone of thesearrow_forward
- b. A stock has an expected return of 14 percent, the risk-free rate is 4 percent, and the market risk premium is 6 percent. What must the beta of this stock be?arrow_forwardWhat is the expected return for Stock A if it has a beta of 1.25, the risk-free rate is 1.5%, and the expected market return is 10.2%? 12.38% 14.25% 12.75% 11.25% 10.88%arrow_forwardRequired Rate of Return Stock R has a beta of 1.3, Stock S has a beta of 0.75, the expected rate of return on an average stock is 9%, and the risk-free rate is 5%. By how much does the required return on the riskier stock exceed that on the less risky stock? Do not round intermediate calculations. Round your answer to two decimal places.arrow_forward
- Stock R has a beta of 1.8, Stock S has a beta of 0.55, the expected rate of return on an average stock is 9%, and the risk-free rate is 3%. By how much does the required return on the riskier stock exceed that on the less risky stock?arrow_forwardWhat is the risk premium of a stock with an expected return of 12% and the risk free rate is 3%?.arrow_forwardQuestion: A stock has an expected return of 10.9 percent, the risk-free rate is 3.1 percent, and the market risk premium is 6.9 percent. What must the beta of this stock be?arrow_forward
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