Zacher Co.'s stock has a beta of 0.90, the risk-free rate is 4.25%, and the market risk premium is 5.50%. What is the firm's required rate of return? Select the correct answer. a. 8.30% b. 8.60% c. 9.20% d. 8.90% e. 9.50%

Zacher Co.'s stock has a beta of 0.90, the risk-free rate is 4.25%, and the market risk premium is 5.50%. What is the firm's required rate of return? Select the correct answer. a. 8.30% b. 8.60% c. 9.20% d. 8.90% e. 9.50%

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter2: Risk And Return: Part I

Section: Chapter Questions

Problem 2P: AA Corporations stock has a beta of 0.8. The risk-free rate is 4%, and the expected return on the...

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Zacher Co.'s stock has a beta of 0.90, the risk-free rate is 4.25%, and the market risk premium is 5.50%. What is the firm's required rate of return?

Select the correct answer.

a. 8.30%

b. 8.60%

c. 9.20%

d. 8.90%

e. 9.50%

Definition Definition Percentage gain or loss from a specific investment over time. The rate of return is the difference between the closing and initial values of an investment divided by the initial value of the investment. The closing value includes any intermediate cash flows such as dividends or interest amounts.

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