The stock market is currently returning 12%. The 10 year treasury bond is currently yielding 1%. The beta of the stock you are considering purchasing is.5 What is your required rate of return for the stock? O 5% 12% 6.5% O 8.7%

The stock market is currently returning 12%. The 10 year treasury bond is currently yielding 1%. The beta of the stock you are considering purchasing is.5 What is your required rate of return for the stock? O 5% 12% 6.5% O 8.7%

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter8: Basic Stock Valuation

Section: Chapter Questions

Problem 8P: A stock is trading at $80 per share. The stock is expected to have a yearend dividend of $4 per...

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Concept explainers

Treasury Market

On-the-run securities are the most recently issued securities in the market depth and are therefore traded at some premium. The off-the-run securities are the ones issued just before the most recent ones. The on-the-run securities have a lower yield to the investor than the off-the-run securities.

Question

The stock market is currently returning 12%. The 10 year treasury bond is currently yielding
1%. The beta of the stock you are considering purchasing is .5
What is your required rate of return for the stock?
5%
O 12%
6.5%
O 8.7%

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