What is the CAPM required return for Stock Z, in decimal form? Round your answer to 4 decimal places (example: if your answer is .13579,  you should enter .1358).  Margin of error for correct responses: +/- .0005.                 expected return (implied by market price)      Beta     Stock Z 9.7% 1.43     MRP 6% ?     T-bonds 5% ?

Q: 8.4   Assume that the risk-free rate is 3% and the market risk premium is 4%. What is the…

A: Required Rate is the least return that is anticipated by an investor on any security. It is…

Q: Calculate the expected returns and expected standard deviations of a two-stock portfolio in which…

A: Expected return on R1 = 0.10 Expected return on R2 = 0.15 Standard deviation of 1 = 0.03 Standard…

Q: Suppose TRF = 5%, TM12%, and b = 2, what is r, the required rate of return on Stock i? 12% 7% 19% 5%…

A: According to Capital Asset Pricing model ,Ri = Rf + [b * (Rm-Rf) ]whereRi = Required rate of return…

Q: The expected return on stock A is 11.15 percent. The expected return on stock B is 8.30 percent.…

A: Capital Asset Pricing Model (CAPM) is an alternative model to find out the expected return or cost…

Q: The risk-free rate is 4.15 percent. What is the expected risk premium on this stock given the…

A: Investors have different options to make investments, and the motive behind investments is to…

Q: a) Calculate the expected rate of return, FB, for stock B3 (FA= 14,30%) b) Calculate the standard…

A: Risk and return are essential financial principles. The term “risk” refers to the uncertainty and…

Q: 1. Based on the following information, what is standard deviation for the stock? Please answer with…

A: Variance = {(Expected return - Given return)2 * Probability+ (Expected return - Given return)2  *…

Q: The following three stocks are available in the market: E(R) В 10.4% 1.26 Stock A Stock B 13.6 1.06…

A: A market model gives a numerical representation of how market dynamics and economic circumstances…

Q: A stock has a required return of 13%, the risk-free rate is 4.5%, and the market risk premium is 4%.…

A: In order to calculate the stock's beta, we can use the the formula given under capital asset pricing…

Q: A stock has a beta of 1.88. The risk free rate is 1.775% and the market risk premium is 5%. What is…

A: The Capital Asset Pricing Model (CAPM) is a mathematical model that describes the relationship…

Q: You are given the returns for the following three stocks: Stock B Stock C 3% -23% 9 37 8 11 4 11…

A: Arithmetic return refers to the method used for calculating the mean or average of the various…

Q: Finance What is the expected standard deviation of stock A's returns based on the information…

A: To Find: Standard Deviation

Q: Do is currently $2.60, Ke is 8 percent, and g is 4 percent. Under Plan A, Do would be immediately…

A: P0 = D0 ( 1 + g) / (Ke - g) PO= Stock Price today D0 = Current year dividend Ke= Required rate…

Q: v (b) What is the expected portfolio return on a portfolio comprised of i. 25% ABC and 75% XYZ? ii.…

A: Expected return of portfolio = (weight of ABC* Return of ABC) + (weight of XYZ* Return of XYZ)

Q: And what are the expected returns for stocks A and B if the conditions are as follows? A0 0.03…

A: Calculation of Expected Return for Stock A:

Q: Consider the three stocks in the following table. Pt represents price at time t, and Qt represents…

A: The rate of return refers to the minimum return to be earned by the investor while investing in the…

Q: None

A: a. Calculate the betas of the two stocks: Covariance(Stock, Market) / Variance(Market) = beta.For…

Q: What is the reward-to-risk ratio for Stock X, in decimal form? Round your answer to 4 decimal places…

A: The reward-to-risk ratio is the reward an investor can earn, for every dollar he or she risks. The…

Q: Suppose that many stocks are traded in the market and that it is possible to borrow at the risk-free…

A: On Risk free portfolio:WA= Weight of Stock A.WA = SDB / SDA + SDB..= 55 / 45 + 55.= 0.55Thus, WB= 1-…

Q: What is the standard deviation of Stock A returns given the information below about its returns…

A: Solution:- Standard deviation means the deviation of a value around its mean. Standard deviation in…

Q: Stock A has a beta of 1.62 and an expected return of 19.1 percent. Stock B has a beta of 1.02 and an…

A: The Capital Asset Pricing Model (CAPM) is a financial model that describes the relationship between…

Q: A stock has an expected return of 12.6 percent and a beta of 1.17, and the expected return on the…

A: Expected return = Risk free rate + Beta *(Expected market return - Risk free rate).

Q: .Consider stock XYZ. If the current book value is 100, the current earnings per share is 10, the…

A: Given, Current Book Value = 100 Current Earnings per share = 10 Growth Rate =3% Discount Rate = 13%…

Q: Assume that the ridk-free rate is 4% and the required return on the market is 11%.What is the…

A: As per CAPM, Required Rate of return = Risk free rate + (Beta * Market risk premium) Market risk…

Q: A stock has an expected return of 0.11, its beta is 1.22, and the risk-free rate is 0.03. What must…

A: It has been provided: Beta = 1.22 Expected return = 0.11 Risk-free rate = 0.03 Required: Expected…

Q: JaiLai Cos. stock has a beta of 0.8, the curret risk-free rate is 5.8 percent, and the expected…

A: Beta = 0.8 Risk free rate (Rf) = 5.8% Market return (Rm) = 14%

Q: Suppose you observe the following situation: Security Peat Co. Re-Peat Co. Beta 1.70 .85 Expected…

A: In the given case, beta  and the expected return of each security is given .  So , the risk free…

Q: The reward-to-risk ratio for Stock X is %. Do not round any intermediate work. Round your *final*…

A: If we evaluate the stock with the help of CAPM than we will compare the actual return from the stock…

Q: Suppose you observe the following situation: Security Pete Corporation Repete Company Beta 1.70 1.39…

A: As per CAPM,Required return = Rf+[β∗MRP]Where Rf = risk free rateβ = BetaMRP = Market risk…

Q: Suppose your expectations regarding the stock price are as follows: State of the Market…

A: Market Probability 0.35, 0.3, 0.35HPR ( including Dividend )44.5%, 14%, -16.5%Applying the Formula

Q: . Use the one-period valuation model P = E/(1 + k) + P1/(1 + k) to price the following stocks…

A: Variables in the question: Earnings (E = $)Required return (k=%)Expected Price Next…

Q: Consider the following information: State Probability Stock A Stock B Stock C Boom 0.32 0.25 0.14…

A: A portfolio is made up of different stocks. Return of a portfolio depends on the return of each…

Q: Consider the following information: Stock Return if Market Return Is: Stock -128 15% A 0 21 B -13 20…

A: Beta:Beta is measurement of volatility of return on stock in respect of market return of stock. For…

Q: Considering these data where 'P1' estimates are analyst forecasts of future stock prices: Stock PO A…

A: To determine the alpha, we first need to determine the CAPM return using the formula below:Then we…

Q: Suppose you observe the following situation: Security Pete Corp. Repete Co. Risk-free rate Beta 1.75…

A: In the given case, we have provided the beta and the expected return of each security.So, using the…

Q: 1. A stock is now at $110. In a year its price will either be ssuming that the interest rate is r =…

A: Call value at a point in time is calculated as shown below. Call value=MaxStock price-Strike price,…

Q: Assume that the risk-free rate of return is 46 and the market risk premium (ie., Rm- R) is 8%. If…

A: Cost Accounting: It is the process of collecting, recording, analyzing the cost, summarizing cost,…

Q: Suppose S = $96, K = $100, u = 1.03, d = 0.97, and R = 1.02. The risk-neutral probability, q, that…

A: In this question, we are required to determine the risk-neutral probability.

Q: Suppose that put options on a stock with strike prices $30 and $35 cost $4 and $7, respectively.…

A: The bull spread would use a strike price of $35 and cost C1 $7 by writing put option and buy put…

Q: Based on the following information, calculate the expected return of Stock A: State of the Economy…

A: The expected return is the estimation of profit or loss that an investor determines from his…

Q: Which one of the following stocks is correctly priced if the risk-free rate of return is 3.0 percent…

A: In this question, we are required to determine the stock which is correctly priced.

Q: The risk-free rate is 3% and the market risk premium is 9%.  If stock A has a beta of -0.9, what is…

A: Formulas: Required return = Risk free rate + (Beta*Market risk premium)

Q: Calculate the expected return of the following information of Bader stock State 1 3 Probability 0.20…

A: Using excel

Q: The risk-free rate is 1.13% and the market risk premium is 6.26%. A stock with a β of 0.84 will have…

A: Given: Risk free rate = 1.13% market risk premium = 6.26% Beta = 0.84

Q: You have a portfolio with the following:   Stock Number of Shares Price Expected Return W 1,000…

A: Portfolio is a bundle of different investments. Investor invest the money in different investment to…

Q: Suppose that the Tbill rate is 3% and the expected return on the market is 9.5%. Consider the…

A: Alpha is the difference between the actual return of the portfolio and the expected risk adjusted…

Q: What is the expected return of Stock A given the information below about its returns across future…

A: Solution:- Expected rate of return means the return expected by an investor from asset by investing…

Stock Yields

The stock yield is otherwise known as the dividend yield. The dividend yield is an annual payment of the stock dividends to the holder of a firm’s stock. The dividend yield is a financial ratio to measure the value of dividend payout every year for the relative stock price. The yield of a stock is usually shown in a percentage that discloses the expected future earnings from stock depending on the current stock price in the future. Stock yield will change depending on the market fluctuations and in accordance with the market fluctuations, the dividends will be increased or decreased by the firm.