Suppose Autodesk stock has a beta of 2.10, whereas Costco stock has a beta of 0.72. If the risk-free interest rate is 4.5% and the expected return of the market portfolio is 13.5%, what is the expected return of a portfolio that consists of 60% Autodesk stock and 40% Costco stock, according to the CAPM? The expected return is %. (Round to two decimal places.)

Suppose Autodesk stock has a beta of 2.10, whereas Costco stock has a beta of 0.72. If the risk-free interest rate is 4.5% and the expected return of the market portfolio is 13.5%, what is the expected return of a portfolio that consists of 60% Autodesk stock and 40% Costco stock, according to the CAPM? The expected return is %. (Round to two decimal places.)

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 25P

See similar textbooks

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?
Suppose the risk-free return is 6.3% and the market portfolio has an expected return of 11.5% and a standard deviation of 16%. Johnson & Johnson Corporation stock has a beta of 0.72. What is its expected return? The expected return is __ % ? (Round to two decimal places.)
If the risk free rate is 4.4%, the expected return on the market portfolio (i.e., Rm)( is 11.6%, and the beta of Stock B is 0.9 , what is the required rate of return for Stock B according to the Capital Asset Pricing Model (CAPM)? (Round your answer rounded to one decimal place and record without a percent sign). Your Answer: If the risk free rate is 1.2%, the market risk premium (i.e., Rm - Rf) is 13.5%, and the beta of Stock B is 1.9 , what is the required rate of return for Stock B according to the Capital Asset Pricing Model (CAPM)? (Round your answer rounded to one decimal place and record without a percent sign). Your Answer:
If the risk free rate is 2 %, the expected return on the market portfolio is 12% and the beta of Stock B is 11, what is the required rate of return for Stock B according to the Capital Asset Pricing Model (CAPM)? (Round your answer rounded to one decimal place and record without a percent sign).
Assume the expected return on the market is 9 percent and the risk-free rate is 4 percent. What is the expected return for a stock with a beta equal to 1.80? (Round answers to 2 decimal places, e.g. 15.25.) What is the market risk premium? (Round answers to 2 decimal places, e.g. 15.25.)
The risk-free rate is 5.6%, the market risk premium is 8.5%, and the stock’s beta is 2.27. What is the required rate of return on the stock, E(Ri)? Use the CAPM equation.
Assume that the risk-free rate is 3.5% and the expected return on the market is 10%. What is the required rate of return on a stock with a beta of 0.7? Round your answer to two decimal places.
The risk-free rate of return is currently 0.02, whereas the market risk premium is 0.07. If the beta of RKP, Inc., stock is 1.6, then what is the expected return on RKP? Round to three decimal places.
Assume that the risk-free rate is 6.5% and the required return on the market is 8%. What is the required rate of return on a stock with a beta of 0.6? Round your answer to two decimal places.
Using 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?
a) Astock has expected return of 10% and a beta of 0.70. Assume the risk - free rate is 5.5%. what must the expected return on the market be? b ) A stock has expected return of 15%, its beta is 1.45, and the expected return on the market is 12%. What must the risk - free rate be?