You own $17,765 of Opsware, Inc. stock that has a beta of 3.73. You also own $24,310 of Lowe's Companies (beta = 1.97) and $4,675 of New York Times (beta = 1.08). Assume that the market return will be 13 percent and the risk-free rate is 6 percent. What is the market risk premium? Market risk premium % What is the risk premium of each stock? (Round your answers to 2 decimal places.) Opsware's risk premium Lowe's risk premium % New York Time's risk premium % What is the risk premium of the portfolio? (Do not round intermediate calculations and round your final answer to 2 decimal places.) Portfolio risk premium %

You own $17,765 of Opsware, Inc. stock that has a beta of 3.73. You also own $24,310 of Lowe's Companies (beta = 1.97) and $4,675 of New York Times (beta = 1.08). Assume that the market return will be 13 percent and the risk-free rate is 6 percent. What is the market risk premium? Market risk premium % What is the risk premium of each stock? (Round your answers to 2 decimal places.) Opsware's risk premium Lowe's risk premium % New York Time's risk premium % What is the risk premium of the portfolio? (Do not round intermediate calculations and round your final answer to 2 decimal places.) Portfolio risk premium %

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

See similar textbooks

Similar questions

The common stock of Anthony Steel has a beta of 1.1. The risk-free rate is 5 percent and the market risk premium (rm - rf) is 5 percent. What is the company's cost of common stock, rs? Express your answer in percentage (without the % sign) and round it to two decimal places.
← You are thinking of buying a stock priced at $109.31 per share. Assume that the risk-free rate is about 4.03% and the market risk premium is 6.48%. If you think the stock will rise to $118.76 per share by the end of the year, at which time it will pay a $3.48 dividend, what beta would it need to have for this expectation to be consistent with the CAPM? The beta is (Round to two decimal places.) ...
FlavR Company stock has a beta of 2.14, the current risk-free rate is 2.14 percent, and the expected return on the market is 9.14 percent. What is FlavR Company's cost of equity?
You expect the risk-free rate to be 4 percent and the market return to be 10 percent. You also have the following information about three stocks. Current Expected Expected Stock Beta Price Price Dividend U 1.5 $10 $11.50 $1.00 N 1.1 $27 $30 $0.00 Ο 0.8 $35 $36 $1.50 (Question 2 of 2) What is the required rate of return (based on the CAPM) for an equally weighted portfolio of the three stocks? (Enter your answer as a percentage, i.e., "10.25" for 10.25 percent
What is the intrinsic price of a stock that pays a dividend of $2.43, has a dividend growth rate of 3.5% and a Beta of 1.20? The market return is 5.15% and the risk free rate is 3%. O A. $21.84 O B. $33.66 O C. $40.67 O D. $120.92 QUESTION 18 What is the intrinsic price of a stock that pays a dividend of 60 cents, has a dividend growth rate of 4.80% and a Beta of 2.57? The market return is 7.75% and the risk free rate is 2.5%. O A. $1.22 O B. $5.62 O C. $6.19 O D. $25.39
Suppose the expected return on the market is 10 percent and the risk-free rate is 5 percent. Solomon Inc. stock has a beta of 1.4. What is the expected return on the Solomon stock? Question 9 options: A) 12.8% B) 19.3% C) 12.0% D) 7.8%
Give the return of the stock in which you would most likely invest and show the preferred order of the stocks if you were considering further investment, all other things being equal. Stock Beta Risk-Free Market-Rate CA-K 0.95 5.5% 9% AU-L 1.05 6% 8.5% TT-M 1.10 5% 8%
The risk-free rate of return is 3.9 percent and the market risk premium is 6.2 percent. If the firm's stock has a beta of 1.21, what is the cost of equity? Group of answer choices 11.40% 13.82% 12.79% 12.47% 12.61%
son.1 You own $17,290 of Opsware, Incorporated stock that has a beta of 3.61. You also own $20,020 of Lowe’s Companies (beta = 1.62) and $8,190 of New York Times (beta = 1.16). Assume that the market return will be 15 percent and the risk-free rate is 6 percent. What is the market risk premium? What is the risk premium of each stock? What is the risk premium of the portfolio?
B24&Co stock has a beta of 1.50, the current risk- free rate is 3.00 percent, and the expected return on the market is 10.50 percent. What is B24&Co's cost of equity? Which of the following is correct? а.) 15.00% b.) 14.25% c.) 23.25% d.) 18.75%
Help
Ice Company stock has a beta of 1.92, the current risk-free rate is 5.17 percent, and the expected return on the market is 15.17 percent. What is Ice Company's cost of equity?

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS