Question: a. Round to two decimal places b. multiple choice (Required rate of return using CAPM) a. Compute a fair rate of return for Intel common

a. Round to two decimal places

b. multiple choice

(Required rate of return using CAPM) a. Compute a fair rate of return for Intel common stock, which has a 1.9 beta. The risk-free rate is 8 percent, and the market portfolio (New York Stock Exchange stocks) has an expected return of 12 percent. b. Why is the rate you computed a fair rate? a. Using the CAPM, the fair rate of return for Intel common stock is %. (Round to two decimal places.) b. Why is the rate you computed in part (a) a fair rate? (Select the best choice below.) O A. The computed 15.60% is a fair rate because it compensates the investor for the time value of money and for assuming risk. O B. The computed 15.60% is a fair rate because it does not compensate the investor for the time value of money and for assuming risk

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

(Capital Asset Pricing Model) Breckenridge, Inc., has a beta of 0.77. If the expected market return is 10.0 percent and the risk-free rate is 7.0 percent, what is the appropriate expected return of...

Heavy Keele Ltd.(HK) has a long-standing reputation as a manufacturer of quality sailboats. HK currently produces two different models of sailboat from a single production facility- the HK41 and the...

Assessing a Direct Investment in Chile by U.S. Computer Corporation David Smith is chief financial officer for U.S. Computer Corporation (USCC), a successful and rapidly growing manufacturer of...

Question 1 As a financial analyst, you are tasked with pricing a common stock (the intrinsic value). You have gathered these data. Current annual dividend on N stock is $0.78. Dividends are expected...

Holtzman Clothiers's stock currently sells for $36 a share. It just paid a dividend of $2.25 a share (i.e., D 0 = $2.25). The dividend is expected to grow at a constant rate of 4% a year. What stock...

A. The standard deviation of a stock's annual returns is 38.6%. The standard deviation of market returns is 24.9%. If the correlation between the returns of the stock and the market is 0.3, what is...

a. (Required Rate of Return Using CAPM) Compute a fair rate of return for Apple common stock, which has a 1.5 beta. The risk-free rate is 8 percent and the market portfolio (New York Stock Exchange...

Check My Work (3 remaining) Holtzman Clothiers's stock currently sells for $23.00 a share. It just paid a dividend of $1.25 a share (i.e., D0=$1.25 ). The dividend is expected to grow at a constant...

4. Problem 9.03 (Constant Growth Valuation) eBook Holtzman Clothiers's stock currently sells for $21.00 a share. It just paid a dividend of $2.75 a share (.e. Do = $2.75). The dividend is expected to...

(Expected rate of return using CAPM Compute the expected fretum forte common to which has a 12 The ride treenate 3 percent and the market portfolio (comod of New York Stock Exchange Modal has an...

What would you do in each of the scenarios described in Table, Ethical Decision Making in the International Context?

Zorro Ltd acquired all the issued shares of Zen Ltd on 1 January 2019. The following intra-group transactions have taken place between the two entities since this acquisition: Assume an income tax...

The Stewart Company has $ 1 , 0 4 4 , 5 0 0 in current assets and $ 4 4 9 , 1 3 5 in current liabilities. Its initial inventory level is $ 2 8 2 , 0 1 5 , and it will raise funds as additional notes...

Add "Viggo Mortenslet cast = new Map ( ) ;en " to the cast as the key, with value "Aragorn".