Question: What is the expected return for a stock with a of 0.07 if the market return is 10.5% and the risk free rate is 2.2%?

What is the expected return for a stock with a of 0.07 if the market return is 10.5% and the risk free rate is 2.2%?

Please show work very confused

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:

Joel Deaine, CEO of Deaine Enterprises Inc. (DEI), is considering a special offer to manufacture a new line of womens clothing for a large department store chain. DEI has specialized in designer...

Q:

49. The two-factor model on a stock provides a risk premium for exposure to market risk of 9%, a risk premium for exposure to interest rate risk of (-1.3%), and a risk-free rate of 3.5%. The beta for...

Q:

DISNEYS NUMBERS Use the following information on Disney to answer the case questions. Disneys current stock price is $140.00 per share. The average growth rate of the companys dividend has been 17.7%...

Q:

Consider the information below for Postman Bfiilders Inc. Suppose that the expected inflation rate and thus the inflation premium increase by 2.0 percentage points, and Postman acquires risky assets...

Q:

Given the following information, calculate the required rate of return on the stock. (Use CAPM) Rrf = 4% ; Rm = 12% ; BA = 1.5 (Rrf = risk free rate, Rm= market risk, BA= beta) A.) 5% B.) 13% C.) 16%...

Q:

Please do problems 8-12 format similar 18J covariance has changed. The following data apply to Problems 8-12. ree mutual funds. The first is A pension fund manager is considering th the second is a...

Q:

Please help! I cannot figure out the rest of this assignment. specifically, I don't know how to calculate common equity and debt from the information. I also have no idea how to calculate WACC in...

Q:

someone please answer part a b and d 7. a) Draw a diagram showing the security market line and use it to help explain the Capital Asset Pricing Model (CAPM) and the concept of Beta in this model. (8...

Q:

Stock X has a standard deviation of 25% and a correlation coefficient of 0.7 with market returns. The expected return of the market is 15% with a standard deviation of 15%. The risk- free rate is...

Q:

Question #4: Stock Valuation and P/E Ratio [16 Points] The research analyst at Ares Capital Management believes that Dolphin Entertainment, Inc (DLPN) has a return on equity (ROE) of 13% with a beta...

Q:

If the market risk premium is 3%, the risk-free rate is 3.5% and the beta of a stock is 1.2, what is the expected return of the stock? (Please answer as a percentage with no percent sign, showing 4...

Q:

The following report appeared in the New York Times on August 7, 1989 (Dollars Strength a Surprise, p. D1): But now the sentiment is that the economy is heading for a soft landing, with the economy...

Q:

The cycle in Figure represents the operation of a gasoline internal combustion engine. Volume V3 = 4.00V1. Assume the gasoline - air intake mixture is an ideal gas with = 1.30 what are the ratios...

Q:

Bacteria are growing in the old yogurt in my fridge. Assume they are growing at an exponential rate. Originally, there are 1 0 , 0 0 0 bacteria. After three days, there are 3 2 , 0 0 0 bacteria. ( In...

Q:

A capacitor with parallel circular plates of radius R = 1.20 cm is discharging via a current of 12.0 A. Consider a loop of radius R/3 that is centered on the central axis between the plates. (a) How...

Q:

The 3-lb ball located at A is released from rest and travels down the curved path. If the ball exerts a normal force of 5 lb on the path when it reaches point B, determine the angular momentum of the...

Q:

An inventive child named Pat wants to reach an apple in a tree without climbing the tree. Sitting in a chair connected to a rope that passes over a frictionless pulley (Fig. P5.51), Pat pulls on the...

Q:

Starting with the vertices P1 (0, 1), P2 (1, 1), P3 (1, 0), P4 (0, 0) of a square, we construct further points as shown in the figure: P5 is the midpoint of P1 P2, P6 is the midpoint of P2P3, P7 is...

Q:

Figure P30.23 is a cross-sectional view of a coaxial cable. The center conductor is surrounded by a rubber layer, which is surrounded by an outer conductor, which is surrounded by another rubber...

Q:

Under what conditions may an employer have a legitimate reason to collect information about employees use of alcohol or other intoxicants outside the workplace? Multiple Choice when employees hold...

Q:

Is it important to evaluate a creative idea before it becomes an innovation?

Q:

Team development stages state that most people coming to a new group are enthusiastic, but that with time they lose some of their morale. What types of things happen in most groups to cause this...

Q:

Select a work or sports team to which you belong/have belonged. Which team member (not the manager or coach) had the highest level of status? Identify the factors that contributed to that persons...