Question: The required return on ABC stock is 1 4 % . The risk - free rate of return is 4 % and the real risk

The required return on ABC stock is 14%. The risk-free rate of return is 4% and the real risk-free rate of return is 2%. How much are investors requiring as compensation for riak?
a.8%
b.10%
c.12%
d.14%
The required return on ABC stock is 1 4 % . The

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:

Please help me with my Finance homework. You will evaluate an individual dividend paying company. Your goal is to write a convincing report that demonstrates reasons for buying or selling short the...

Q:

Need genuine answer Company A has a beta of 0.90, While company B 's beta is 1.30.The required return on the stock market is 9.00%,and the risk free rate is 2.25% .What is the difference between A's...

Q:

please help. Mailings Review View Add-ins Help Tell me what you want to do a. -A === . A .. AaBbCcDc AaBbCcDc AaBb Normal 1 No Spac... Heading 1 AaBbcc Aa Heading 2 Tit Paragraph Styles 9. Calculate...

Q:

Can you please compute information invovling stanley black and decker 1 . Latest dividend ( annual ) 2 . Required Return ( CAPM I = ( SP 5 0 0 return - risk free rate ) * stock beta + risk free rate...

Q:

1) Suppose that the market can be described by the following three sources of systematic risk with associated risk premiums. Factor Industrial production (1) Interest rate (R) Consumer confidence (C)...

Q:

LYXOR CHINAH VERSUS LYXOR MSINDIA: PORTFOLIO RISK AND RETURN1 On a Saturday morning in late September 2015, Susie sat over her breakfast, which was rapidly turning cold, and reflected on the...

Q:

LYXOR CHINAH VERSUS LYXOR MSINDIA: PORTFOLIO RISK AND RETURN1 On a Saturday morning in late September 2015, Susie sat over her breakfast, which was rapidly turning cold, and reflected on the...

Q:

You have decided to play in the stock market. There are many stocks to choose from but you are keen to invest in Moon Ltd and its share is currently trading at $52.50 per share. You are to determine...

Q:

1. AQSM Corporation has a Beta of 1.1. The required return of a market portfolio is 8%. The risk free rate is 2%. What is the require rate of return? (Please answer with decimal. Do Not use %) 2....

Q:

Use the security market line to determine the required rate of return for the followingfirm's stock. The firm has a beta of0.80, the required return in the market place is12.50%, and the risk free...

Q:

Select either "True" or "False" for each of the following statements regarding the advantages and disadvantages of doing business as an LLC. a. All members in an LLC have limited liability. b. An LLC...

Q:

Huang Trucking Company was organized on January 1, 2014. At the end of the first quarter (three months) of operations, the owner prepared a summary of its activities as shown in the first row of the...

Q:

True or false after paying protocols, the percentage of revenue leftovers is called margin

Q:

Pharoah Company reported the following amounts for 2022: Raw materials purchased $95,200 Beginning raw materials inventory 5,824 Ending raw materials inventory 5,040 Beginning finished goods...