Question: The expected return on a security, according to the CAPM, is 12.98%, the beta of the security is 1.52 and the risk-free rate is 1%.

The expected return on a security, according to the CAPM, is 12.98%, the beta of the security is 1.52 and the risk-free rate is 1%. What is the value of the risk premium?

8.88%

6.88%

11.98%

7.88%

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!

a) The expected return on a security, according to the CAPM, is 12.02%, the beta of the security is 1.51 and the risk-free rate is 1.34%. What is the value of the market risk premium? b) A stock has...

The expected return on a security, according to the CAPM, is 13.46%, the beta of the security is 1.76 and the risk-free rate is 1.19%. What is the value of the risk premium? a. 6.97% b. 5.78% c....

Question 6 Incorrect Mark 0.00 out of 1.00 The expected return on a security, according to the CAPM, is 14.68%, the beta of the security is 1.31 and the risk-free rate is 2.09%. What is the value of...

Q 10 Asset pricing models. a) The Capital Asset Pricing Model (CAPM) implies that investors require a higher return to hold highly volatile securities. Is the statement true or false? Explain using...

For the next two questions , here are the data on two companies. The T-bill rate is 3% and the market risk premium is 6.5% Company $5 Below Store Everything $1 store Forecasted Return 12% 6% Standard...

QUESTION 1 (25 MARKS) 1. A portfolio consists of three assets: Share X with a beta of 1.2, Share Y with a beta of 0.9, and Share Z with a beta of 1.8. The respective weights of these assets in the...

11. Changes to the security market line The following graph plots the current security market line (SML) and indicates the return that investors require from holding stock from Happy Corp. (HC)....

b) Based on the information in. Stewart Company Balance. Shest, assuming the po preferted. dividends werepald what is the return on comron equity? i) Based on the information in Stewart Company...

11. Changes to the security market line The following graph plots the current security market line (SML) and indicates the return that investors require from holding stock from Happy Corp. (HC)....

Suppose firms X, Y and Z have the expected returns and betas shown below: Company Expected Return Beta Firm X 7.50% 0.48 Firm Y 14.81% 1.05 Firm z 20.90% 1.52 The risk-free rate is currently 4.10%...

Sketch the magnitude and phase response of the multipath channel y(n) = x(n) + ax(n M) a > 0, for a

write in simple words about the given architecture functions. Student User Interface Tutoring Process Module Expert Module Student Module Pedagogical Module Problems Generations Module Figure 1. ITS...

What is the effect of the collection of a specifc customer account that had been previoully written off under the alomance method of accounting? It will increase income in the period it is colected....

Which of the following statements is correct? Select answer from the options below Capital costs are not incurred until the purchaser is recognized as having control. Unrealized gains and losses on...

What research methods will you use to obtain the needed information?

What are the major wants, interests, needs, and expectations of each public?

What does this public expect from the organization vis--vis this issue?