What is the expected rate of return for a stock that has a beta of 1.0 if
Question:
a. 15%.
b. More than 15%.
c. Cannot be determined without the risk-free rate.
Expected Return
The expected return is the profit or loss an investor anticipates on an investment that has known or anticipated rates of return (RoR). It is calculated by multiplying potential outcomes by the chances of them occurring and then totaling these...
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 50% (14 reviews)
This is a question from the Capital Asset Pricing Model CAPM topic As ...View the full answer
Answered By
Anurag Agrawal
I am a highly enthusiastic person who likes to explain concepts in simplified language. Be it in my job role as a manager of 4 people or when I used to take classes for specially able kids at our university. I did this continuously for 3 years and my god, that was so fulfilling. Sometimes I've skipped my own classes just to teach these kids and help them get their fair share of opportunities, which they would have missed out on. This was the key driver for me during that time. But since I've joined my job I wasn't able to make time for my passion of teaching due to hectic schedules. But now I've made a commitment to teach for at least an hour a day.
I am highly proficient in school level math and science and reasonably good for college level. In addition to this I am especially interested in courses related to finance and economics. In quest to learn I recently gave the CFA level 1 in Dec 19, hopefully I'll clear it. Finger's crossed :)
4.80+
2+ Reviews
10+ Question Solved
Related Book For
Question Posted:
Students also viewed these Accounting questions
-
What is the accounting rate of return for a project that is estimated to yield total income of $390,000 over three years and costs $920,000?
-
What is the difference between the expected rate of return and the required rate of return? What does it mean if they are different for a particular asset at a particular point in time?
-
What is the relation between the expected rate of return and the required rate of return as they pertain to the fair market price and the current market price of a security?
-
Q-1 A motor car shaft consists of a steel tube 30 mm internal diameter and 4 mm thick. The engine develops 10 kW at 2000 r.p.m. Find the maximum shear stress in the tube when the power is transmitted...
-
Two events, A and B, have probabilities P(A) = .2, P(B) = .4, P(A | B) = .2. a. Create a Venn diagram of this situation. b. Find the value of each probability indicated. i. P(A and B) ii. P(not B)...
-
Natalie Bryan, a widow who lives at 425 Flathead Way, Kalispell, Montana 59901, has three adult children (Daniel Bryan, Amanda Green, and Samantha Cruz). During the year, Natalie makes the following...
-
Consider a payoff \(C\) that will occur in 2 years, taking one of the three possible values \(C_{0}, C_{1}, C_{2}\). The short rate lattice for these 2 years is shown in Figure 16.16, with \(d_{i...
-
Calculate the child credit for the following taxpayers. Please show your work. a. Jeremy is a single (head of household) father with a dependent 8-year-old son and $79,600 of AGI:...
-
What role does strategic foresight play in shaping strategic planning processes, particularly in anticipating and adapting to disruptive technological advancements, regulatory shifts, and...
-
2. EMORY ALUMINUM The Emory Aluminum company rolls and sells aluminum foil in several widths. (Length is the same for all orders). Customers can order rolls of foil 24 inches, 20 inches, 12 inches,...
-
Characterize each company in the previous problem as underpriced, overpriced, or properly priced.
-
Kaskin, Inc., stock has a beta of 1.2 and Quinn, Inc., stock has a beta of .6. Which of the following statements is most accurate? a. The expected rate of return will be higher for the stock of...
-
What are the weaknesses in the Sement examples for interpreting its financial well-being? Explain.
-
a. Express \(z_{1} / z_{2}\) in rectangular form. b. Verify that \(\left|z_{1} / z_{2} ight|=\left|z_{1} ight| /\left|z_{2} ight|\). \(\frac{-2 j}{3-4 j}\)
-
a. Solve the IVP. b. Confirm the result of (a) in MATLAB. \(\ddot{x}+2 \dot{x}+x=u(t-1)-u(t-2), x(0)=0, \dot{x}(0)=0\)
-
Find the Laplace transform of each periodic function whose definition in one period is given. \(h(t)=2-t, 0
-
Perform the operations and express the result in rectangular form. \(\frac{\left(\frac{2}{3}+\frac{1}{2} j ight)^{4}}{\left(1+\frac{3}{4} j ight)\left(-1+\frac{1}{3} j ight)}\)
-
Find the inverse Laplace transform by using the partialfraction expansion method. \(\frac{s+10}{s\left(s^{2}+2 s+5 ight)}\)
-
a. Load the ICG on your computer and carry out the exercise. Performance number =________________________. (http://www.umich.edu/~elements/6e/icm/enzyme.html) b. Rederive Equation (9-9) assuming the...
-
Citing a scientific article, explain in your own words, how DNA fingerprinting has been used in forensic science to solve crimes and why it may not always be accurate or effective.
-
Explain why election pollsters use inferential statistics rather than descriptive statistics to predict the outcome of an election.
-
Christie Johnson, CFA, has been assigned to analyze Sundanci using the constant dividend growth price/earnings (P/E) ratio model. Johnson assumes that Sundancis earnings and dividends will grow at a...
-
Peninsular Research is initiating coverage of a mature manufacturing industry. John Jones, CFA, head of the research department, gathered the following fundamental industry y and market data to help...
-
Janet Ludlows firm requires all its analysts to use a two-stage dividend discount model (DDM) and the capital asset pricing model (CAPM) to value stocks. Using the CAPM and DDM, Ludlow has valued...
-
Janice will need to pay $200 at the end of every month for the next 12 months, except for the payment of the 8th month. What is the present value, assuming a rate of 4%, compounded quarterly?
-
List and explain two management tools in the planning process and two measurable performance indicators. Explain in detail.
-
What does a high PE tell us about the value of the stock price (over or under valued)? What does a low PE tell us about the value of the stock price (over or under valued)? Be specific with your...
Study smarter with the SolutionInn App