Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Stock A has a beta of 1.30, and its required return is 13.25%. Stock B's beta is 0.90. If the risk-free rate is 4.75%, what is the required
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- suppose a risk free rate is 6% and the market premium is 7%. D1 is 1.25 per share and stock beta is 1.15. What is the required return?arrow_forwardThe risk-free rate is 2.58% and the market risk premium is 4.31%. A stock with a β of 1.22 will have an expected return of ____%.arrow_forwardStock 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%arrow_forward
- A stock has an expected return of 18.00%. The risk-free rate is 1.45% and the market risk premium is 9.30%. What is the β of the stock?arrow_forwardand the risk-free rate is 2.8 percent. market be? 7 16. Using CAPM A stock has an expected return of 10.2 percent and a beta of 91, and the expected return on the market is 10.8 percent. What must the risk-free rate be? return of 11.4arrow_forwardAssume the expected return on the market is 16 percent and the risk-free rate is 4 percent. -What is the expected return for a stock with a beta equal to 0.50? - What is the market risk premium?arrow_forward
- A stock has an expected return of 11.0%, its beta is 0.95, and the risk-free rate is 6.00%. What must the expected return on the market be?arrow_forwardWhich of the following statements is CORRECT? (Assume that the risk-free rate is a constant.) a. The effect of a change in the market risk premium depends on the slope of the yield curve. b. If the market risk premium increases by 1%, then the required return on all stocks will rise by 1%. c. If the market risk premium increases by 1%, then the required return will increase by 1% for a stock that has a beta of 1.0. d. The effect of a change in the market risk premium depends on the level of the risk-free rate. e. If the market risk premium increases by 1%, then the required return will increase for stocks that have a beta greater than 1.0, but it will decrease for stocks that have a beta less than 1.0.arrow_forwardThe risk-free rate is 1.41% and the expected return on the market 10.36%. A stock with a β of 1.52 will have an expected return of ____%.arrow_forward
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