Question: Security A has expected return of 17.6% and beta of 1.4. If the risk-free rate is 6%, what is the reward-to-risk rate for Security A?

Security A has expected return of 17.6% and beta of 1.4. If the risk-free rate is 6%, what is the reward-to-risk rate for Security A?

Step by Step Solution

★★★★★

3.41 Rating (154 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock

To determine the rewardtorisk ratio for Security A we use the concept of the market risk premium and ... View full answer

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 General Management Questions!

Q:

The risk free rate of interest on government securities in 2013 is 7.3% Required: Prepare a report for the directors of In Style Pty. Ltd assessing its: a) Profitability. b) Efficiency. |2013 |2012 y...

Q:

The risk free rate is 7%, the return in the market is 10%, and the beta is 1.30. What return must you receive to be satisfied that you are being fairly compensated for the risk of the firm?

Q:

The risk free rate of interest (continuously compounded) is 5%.Does put- call parity hold for the April options with strike price $50, and strike price $65 (calculations based on 71 days to maturity,...

Q:

Calculate the following Question 1. The following information was extracted from the books of Lima traders for the year ended 31st dec 2009. a) Closing capital as at 31st /12/2009 -: sh 4000,000. b)...

Q:

Part A. Question 1 Security A has expected return of 17.6% and beta of 1.4. If the risk-free rate is 6%, what is the reward-to-risk rate for Security A? Enter your answer as a percentage rounded off...

Q:

Answer Question: Part A. Question 1 Security A has expected return of 17.6% and beta of 1.4. If the risk-free rate is 6%, what is the reward-to-risk rate for Security A? Enter your answer as a...

Q:

Problems for Lecture 7 1. Security B has a price of $60 and a beta of 1.25. The risk-free rate is 1% and the market risk premium is 4%. (a) According to the CAPM, what return do investors expect on...

Q:

A stock has an expected return of 10%, its beta is .9, and the risk-free rate is 5%. What is the expected return on the market? A stock has an expected return of 12%, the risk-free rate is 3%, and...

Q:

Gungan Inc. has an expected return of 12% and a beta of 1.80. The risk-free rate is 1%. What is the EXPECTED RETURN ON THE MARKET? Question 9 (1 point) Hutt Corp. has a beta of 0.95. The risk-free...

Q:

onsider a mean-variance portfolio framework. The market portfolio, M, has an expected return of 10% and standard deviation of 20%. The risk-free rate is 4%. ) An investor has a mean-variance utility...

Q:

1) Which of the following audit procedures would an auditor most likely perform to test controls relating to management's valuation assertion for accounts receivable? Multiple Choice A) Inquire about...

Q:

Create a circuit that has 7 input bits IN0 to IN6, that drive one seven segment display in the order indicated below. Find out to which values the 7 input bits need to be set to get the decimal...

Q:

You know the following concerning a common stock: EPS$3.00 Payout ratio25% P/E10 Annual ROR6% of earnings and div 1) If you want to earn 10% percent, should you buy this stock? 2) What is the maximum...

Q:

What is the speedup of the basic pipeline (with branch predictions) shown in the Introduc- tion slides (Tsequential / Tpipelined) if 1/5 of all instructions are conditional branches and 4/5 of them...

Q:

3.You borrow $10,000 from Friendly Finance for four years with quarterly payments keyed to a 10% interest rate.$1,000 interest each year plus $10,000 equals $14,000.Spread over 4 years this loan...

Q:

reword Chaukhats should be seasoned teak wood. Shutters should be teaked wood 4.3cm thick penelled and partly glazed as required with additional wire gauge shutters. Allfitting should be brass. Doors...

Q:

You want to create a portfolio equally as risky as the market, and you have $ 1 , 0 0 0 , 0 0 0 to invest. Given this information, fill in the rest of the following table: ( Do not round intermediate...

Q:

Write a program to move a signed number from smaller register to bigger register. Hint: movzx ax, bl Topic: Data Related Operators and Directives in assembly language

Q:

You have $5,000 in a 50% margin account. You have been following a stock that you think you want to buy. The stock is priced at $52. You decide that if the stock falls to $50, you would like to buy...

Q:

Describe the 2 items an investor should consider before reaching a decision to sell an investment.

Q:

What is a problem investment? What questions should one consider when analyzing each investment in a portfolio?

Q:

The table shows the political affiliations of U.S. voters and their positions on supporting stronger immigration enforcement. a) What's the probability that i) A randomly chosen voter favors stronger...

Q:

Twenty percent of cars that are inspected have faulty pollution control systems. The cost of repairing a pollution control system exceeds $100 about 40% of the time. When a driver takes her car in...

Q:

You are dealt a hand of three cards, one at a time. Find the probability of each of the following. a) The first heart you get is the third card dealt. b) Your cards are all red (that is, all diamonds...