Question: If the risk-free return is 8% and expected return on market portfolio is 12%, calculate the rate of return of the stock if it's required

If the risk-free return is 8% and expected return on market portfolio is 12%, calculate the rate of return of the stock if it's required return is a) 15% b) 18% c) 10%

Note: The beta is not given in the question

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!

i. If the risk-free return is 8% and expected return on market portfolio 12% calculate the rate of return of the stock if its required return is: a. = 15% b. 18% c. 10% ii. The risk - free return is...

Sums for Practice 1 . ( a ) The risk - free return is 8 % and the return on market portfolio is 1 2 % if required retum on a stock is 1 5 % , what is beta? ( b ) The risk - free return is 9 % . The...

( a ) The risk - free return is 8 % and the return on market portfolio is 1 2 % if required return on a stock is 1 5 % , what is beta?

You are considering for security selection the following shares from the market. The assumptions of MPT and CAPM are met. You decide to keep two shares in your portfolio. You choose the two shares...

Following are the information of Mr. Musab about his portfolio. The risk-free rate of return is 4%; the expected return on market portfolio is 12%; Standard Deviation of a Market Portfolio and...

A. Annual risk-free rate is 4%. Annual expected return on market portfolio is 12% and stock S has a Beta of 0.5. Predict with CAPM the annual expected return on S? B. The Expected return on S = 10%,...

Suppose the risk-free return (R f ) and the expected return on market portfolio (R m ) are 3% and 13%, respectively. Furthermore, assume, the Capital Asset Pricing Model (CAPM) is the best way to...

The table below shows information for 3 stocks. The risk-free rate is 1.5% and the required return for the market portfolio is 12%. Calculate the required return for each stock, using the Capital...

Suppose that youre given the following information of rates of return for the stock market as assessed by your financial analyst in mutual fund. Answer the following questions: a)What are the means,...

You buy a share of stock today. The stock is paying dividends, and the first dividends to be paid at the end of the first year (t=1) is D 1 = $2. Dividends are expected to grow at the annual rate of...

This subsection shows that for any isomorphism, the inverse map is also an isomorphism. This subsection also shows that for a fixed basis B of an n-dimensional vector space V, the map RepB : V Rn is...

Jimmies Fishing Hole has the following transactions related to its top-selling Shimano fishing reel for the month of June 2015: Required: 1. Calculate ending inventory and cost of goods sold at June...

Wilson Company of country X and Northern Industries of country Y have issued financial statements in compliance with the accounting principles of their respective countries. They would like to work...

Assume the average Texas adult ( 2 1 + years of age ) consumes 3 . 6 gallons of craft beer per year Shannon's market share in the Austin market has been steady at 2 . 9 % Based on Shannon's...

Can you determine which type of justice (procedural, in - ter actional, or distributive) is most important to your customers or under which circumstances one type of justice becomes more important?

Where do your products or services fi t on the fairness sus - ceptibility quotient scale? How does this infl uence your service behaviors toward customers?

What is A free product or gift?