Question: What is the expected return on a stock with a = 1.20, where the risk-free rate is 3.25% and the expected return on the market

What is the expected return on a stock with a = 1.20, where the risk-free rate is 3.25% and the expected return on the market is 9.25%? A. 7.85% B. 11.10% C. 10.45% D. 14.35%

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!

Please help with the boxes that are empty; show work/equations! | E The Capital Asset Pricing Model do not round any calculations What would be the expected return of a stock with the following CAPM...

1.) The expected return of a stock is equal to a. the risk-free rate of interest plus the beta times the market rate of return. b. the expected percentage capital gains from the stock. c. the...

1) The expected return on KarolCo. stock is 16.5 percent. If the risk-free rate is 5 percent and the beta of KarolCo is 2.3, then what is the risk premium on the market assuming CAPM is true? a. 2.5%...

Which of the following statements is true? Group of answer choices e) The expected return of a stock does not depend on the risk-free rate c) The CAPM uses beta to calculate the expected return on a...

Find the expected return of a stock using the formula: expected return risk - free rate + beta x ( expected market return - risk - free rate ) , whereas expected market return = 1 1 % ; beta = 1 . 3...

Which of the following statements is correct? Select one: a. Unique risk and market risk can both be eliminated through diversification. b. A well-diversified portfolio eliminates unique risk. c. A...

a Which of the following statements is true? Group of answer choices e) The expected return of a stock does not depend on the risk-free rate a) The CAPM calculates the observed return on a stock c)...

Which of the following statements is true? The expected return of a stock does not depend on the risk-free rate The CAPM uses beta to calculate the expected return on a stock The CAPM calculates the...

Which of the following statements is true? O e) The expected return of a stock does not depend on the risk-free rate Ob) The expected return on a stock is inversely related to its beta O d) In CAPM,...

Chapter 1 1 : Systematic vs Unsystematic Risk Which of the following is FALSE? CAPM says the expected return of a stock = beta * ( expected return of market - risk - free rate ) MINUS the risk - free...

Gekko Properties is considering purchasing Teldar Properties. Gekko's analysts project that the merger will result in incremental after-tax net cash flows of $2 million, $4 million, $5 million, and...

Ann Chovies, owner of the Perfect Pasta Pizza Parlor, wants to calculate her reorder point. Her average usage is 20 pounds of pepperoni each day with an average lead time of 3 days. What is the...

Defined benefit and cash balance pension plans may use either the excess or offset methods of Social Security integration while target benefit and money purchase pension plans may only use the excess...

Which of the following are problems with identifying users of ABC? Multiple select question. ABC means different things to different organizations. Organizations will announce the discontinuance of...

Teamwork. Pair with a classmate and discuss why the indirect plan of communicating bad news usually has an advantage over the direct plan, even in low-context countries like the United States. Be...

Dr. Josephine Markline, a neurologist, is part of a research team with the local university conducting experimental trials of a new drug intended to alleviate tremors for people with Parkinsons...

Write an effective opening buffer for the following situations: (Objectives 3 and 4) a. Your teacher must indicate to a student that a question was answered incorrectly during a class discussion. b....