A stock has a required return of 9%, the risk-freerate is 4.5%, and the market risk premium is 3%.a. What is the stock’s beta?b. If the market risk premium increased to 5%, what would happen to the stock’srequired rate of return? Assume that the risk-free rate and the beta remain unchanged.

Stock A has a beta of 1.30, and its required return is 13.25%.  Stock B's beta is 0.90.  If the risk-free rate is 4.75%, what is the required rate of return on B's stock?  (Hint:  First find the market risk premium.)

Which of the following statements is CORRECT? (Assume that the risk-free rate is a constant.) a. The effect of a change in the market risk premium depends on the slope of the yield curve. b. If the market risk premium increases by 1%, then the required return on all stocks will rise by 1%. c. If the market risk premium increases by 1%, then the required return will increase by 1% for a stock that has a beta of 1.0. d. The effect of a change in the market risk premium depends on the level of the risk-free rate. e. If the market risk premium increases by 1%, then the required return will increase for stocks that have a beta greater than 1.0, but it will decrease for stocks that have a beta less than 1.0.

A stock has a required return of 10%; the risk- free rate is 3.5%, and the market risk premium is 4%. a. What is the stock's beta? b. If the market risk premium increased to 10%, what would happen to the stock's required rate of return?

Suppose securities A, B, and C have the following expected return and risk.                                                     Stock           Expected return                           Risk  A                                8%                                  6%          B                                7%                                  9%          C                              13%                                 9%          What is the coefficient of variation for stock A?

Assume that the risk-free rate is 7.5% and the market risk premium is 3%. What is the required return for the overall stock market? Round your answer to one decimal place.  _________ % What is the required rate of return on a stock with a beta of 1.8? Round your answer to one decimal place. _____________  %

Assume that the risk-free rate is 2.8 percent, and that the market risk premium is 4.8 percent. If a stock has a required rate of return of 16.1 percent, what is its beta? Your Answer: Answer

1. Stock Y has a beta of 1.2 and an expected return of 11.1 percent. Stock Z has a beta of .8 and an expected return of 7.85 percent. If the risk-free rate is 2.4 percent and the market risk premium is 7.2 percent, the reward-to-risk ratios for stocks Y and Z are ____ and ____ percent, respectively. Since the SML reward-to-risk is ____ percent, Stock Y is ____(undervalued/ overvalued) and Stock Z is ____(undervalued/ overvalued).

b. A stock has an expected return of 14 percent, the risk-free rate is 4 percent, and the market risk premium is 6 percent. What must the beta of this stock be?

Suppose stock A's return is related to the market return by: RetA=0.6*Market Return + 0.04* (Market Return)² What is the change in stock A given a change in the market return? Suppose stock B's return is related to the market return by: RetB=0.6*Market Return What is the difference in returns between A and B if the market return is 5%? What is the difference if the market return is -5%?