If a stock has a of 1.5, the return on the market is 10%, and the
Question:
If a stock has a β of 1.5, the return on the market is 10%, and the risk-free rate of return is 5%, what expected rate of return should this stock offer according to the Capital Asset Pricing Model? If the expected value of the stock is $100, what price should the stock be selling for today?
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 90% (10 reviews)
According to the CAPM pricing equation the s...View the full answer
Answered By
Patrick Busaka
I am a result oriented and motivated person with passion for challenges because they provide me an opportunity to grow professionally.
5.00+
38+ Reviews
58+ Question Solved
Related Book For
Question Posted:
Students also viewed these Business questions
-
A stock has returns of 15 percent, 12 percent, 15 percent, 22 percent, and 11 percent. What are the arithmetic and geometric returns?
-
A stock has returns of 29 percent, 17 percent, 9 percent, 14 percent, and 24 percent. What are the arithmetic and geometric returns?
-
1) Given an expected market return of 12.0%, a beta of 0.75 for Benson Industries, and a risk-free rate of 4.0%, what is the expected return for Benson Industries? A) 9.0% B) 10.0% C) 4.0% D) 13.0%...
-
Delivery Service purchased a commercial umbrella policy with a $10 million liability limit and a $100,000 self-insured retention. The umbrella insurer required Delivery Service to carry a $1 million...
-
This case describes one firm's approach to improving employee retention. (For the case, go to www.cengage.com/management/mathis or visit the instructor companion website.) Discuss how the culture of...
-
Subtract the polynomials. (x - 1)(4x4 + 3x + 7)
-
The torque needed to open a factory-sealed jar is about the same as the torque required to turn the wheel on a passenger car. You know that the force necessary to turn your cars steering wheel is...
-
Teldar Paper Company manufactures three products (computer paper, newsprint, and specialty paper) in a continuous production process. Senior management has asked the controller to conduct an...
-
What role does transparency play in international diplomacy and negotiations, and how do diplomatic norms and protocols accommodate or challenge transparency initiatives?
-
When 0.08 g of liquid X was vaporised at 100 C, 23 cm 3 of vapour was formed. The atmospheric pressure was 1.02 10 5 Pa. Calculate the relative molecular mass of liquid X. (R = 8.31 J K 1 mol 1 )
-
In a congressional district somewhere in the U.S. West a new representative is being elected. The voters all have one-dimensional political views that can be neatly arrayed on a left-right spectrum....
-
In our examination of the upstream and downstream monopolists we derived expressions for the total output produced. What are the appropriate expressions for the equilibrium prices, p and k?
-
Identify the dollar amounts of Google's 2012 assets, liabilities, and equity as reported in its statements in Appendix A near the end of the book.
-
Ansel is interested in environmental preservation. To that end, he has purchased vast amounts of land and kept it as undeveloped as possible. Recently, Ansel purchased 200 acres of land in Ohio at a...
-
Suppose the base case NPV of the project is $1,143,650.00 and the NPV is $1,362,406.00 when the sales volume is increased by 5,000 units. The sensitivity of the base case NPV to changes in the sales...
-
What are the fundamental differences between a monolithic kernel and a microkernel architecture, and how do these variances impact system performance and flexibility?
-
pwc.csod.com/lms/scorm/clientLMS/LMS3.aspx?rNum=1&aicc_sid=18846322... pwc.csod.com/lms/scorm/clientLMS/LMS3.aspx?rNum=1&aicc_sid=188463228p... pwc Prev O What is a key consideration to address...
-
An analysis is done about 20 selected hotels considering some characteristics. Customer overall satisfaction as well as characteristics such as comfort, amenities and in-house dining have been...
-
Since 1979, low-income recipients have been given food stamps without charge. However before 1979, people bought food stamps at a subsidized rate. For example, to get $1 worth of food stamps, a...
-
Suppose that a business sells 6-month subscriptions to its monthly magazine. On January 1, the company receives a total of $600 for 10 subscriptions. To record this transaction, the company debits...
-
The following data represent 5 points on the supply curve for orange juice: PRICE QUANTITY ($ PER GALLON) (MILLIONS OF GALLONS) 1 ................ 100 2 ................ 300 3 ................ 500 4...
-
Marshall defined an equilibrium price as one at which the quantity demanded equals the quantity supplied. a. Using the data provided in problem 1.1, show that P = 3 is the equilibrium price in the...
-
The equilibrium price in problem is P = 3. This is an equilibrium because at this price, quantity demanded is precisely equal to quantity supplied (Q = 500). One might ask how the market is to reach...
-
f(x)=5x-3, g(x)=x-5 (f+g)(x)=(Simplify your answer.)
-
(5) A small maintenance project consists of the following jobs whose precedence relationships are given below: Job 1-2 1-3 2-3 2-5 3-4 Immediate Predecessor 15 15 3 5 8 8 Activity 3-6 4-5 4-6 5-6 6-7...
-
Let X be a binomial random variable with the probability distribution f(x) shown below. Find the probability distribution of the random variable Y=x. f(x)= Bere 3-x x=0,1,2,3 elsewhere Complete the...
Study smarter with the SolutionInn App