Question: Suppose the risk - free return is 3 . 4 4 % and the market portfolio has an expected return of 1 1 . 6

Suppose the risk-free return is 3.44% and the market portfolio has an expected return of 11.61% and a standard deviation of 17.06%. Pepsico
stock has a beta of 0.74. What is its expected return?

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!

Q:

Suppose the risk free return is 3 % and you measure the market risk premium to be 6 % . Cisco has a beta of 1 . 2 . According to CAPM, what is its expected return?

Q:

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...

Q:

Can you please explain to me my error? Question Type 1 : Suppose the risk free return is 3 % and you measure the market risk premium to be 6 % . Cisco has a beta of 1 . 2 . According to the CAPM,...

Q:

A portfolio consists of 50% of Apple stock and 50% of Starbucks stock. The volatility of Apple stock is 0.22 and the volatility of Starbucks is 0.23. The correlation between the two stocks is 0.36....

Q:

1. If the risk free return is 8% and expected return on market portfolio is 12%, calculate the beta coefficient of the stock if its required rate of return is: a) 15% b 18% 10% 2. A Berhad is...

Q:

a) Explain the Capital Asset Pricing Model and discuss its assumptions. b) Assume the risk free rate is 5 per cent and the market portfolio expected return is 8 per cent. You are examining the...

Q:

P 12-28 (similar to) Question Help Suppose the risk free return is 52% and the market portfoto has an expected return of 9.9% and a standard deviation of 16% Johnson & Johnson Corporation stock has a...

Q:

3. Currently, the risk free return is 3 percent and the expected market rate od return is 10 percent. What is the expected return of the following three-stock portfolio? Amount invested Beta P400,000...

Q:

Currently, the risk free return is 3 percent and the expected market rate od return is 10 percent. What is the expected return of the following three-stock portfolio? Amount invested Beta 400,000 1.5...

Q:

9. Suppose the risk free rate is 4.5% per year, and the market portfolio is expected to generate a return of 15% per year. Assuming the debt of all three firms is risk-free, work out the cost of...

Q:

Explain why it is not wise to accept a null hypothesis.

Q:

Corbit Corp. sold merchandise for $10,000 cash. The cost of merchandise sold was $7,590. The journal entries for this transaction under the perpetual inventory system would be?

Q:

If you can borrow all the money you need at six percent.Doesn't it follow the six percent?Is your cost of capital for the project

Q:

Can you elucidate the role of molecular chaperones and protein quality control systems in maintaining the integrity and homeostasis of the cytoplasm, particularly under conditions of cellular stress...