Using CAPM A stock has an expected return of 10 percent, its beta is .70, and the
Question:
Using CAPM A stock has an expected return of 10 percent, its beta is .70, and the risk-free rate is 5.5 percent. What must the expected return on the market be?
Expected ReturnThe expected return is the profit or loss an investor anticipates on an investment that has known or anticipated rates of return (RoR). It is calculated by multiplying potential outcomes by the chances of them occurring and then totaling these...
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 41% (12 reviews)
Here we need to find the expected return ...View the full answer
Answered By
JAPHETH KOGEI
Hi there. I'm here to assist you to score the highest marks on your assignments and homework. My areas of specialisation are:
Auditing, Financial Accounting, Macroeconomics, Monetary-economics, Business-administration, Advanced-accounting, Corporate Finance, Professional-accounting-ethics, Corporate governance, Financial-risk-analysis, Financial-budgeting, Corporate-social-responsibility, Statistics, Business management, logic, Critical thinking,
So, I look forward to helping you solve your academic problem.
I enjoy teaching and tutoring university and high school students. During my free time, I also read books on motivation, leadership, comedy, emotional intelligence, critical thinking, nature, human nature, innovation, persuasion, performance, negotiations, goals, power, time management, wealth, debates, sales, and finance. Additionally, I am a panellist on an FM radio program on Sunday mornings where we discuss current affairs.
I travel three times a year either to the USA, Europe and around Africa.
As a university student in the USA, I enjoyed interacting with people from different cultures and ethnic groups. Together with friends, we travelled widely in the USA and in Europe (UK, France, Denmark, Germany, Turkey, etc).
So, I look forward to tutoring you. I believe that it will be exciting to meet them.
3.00+
2+ Reviews
10+ Question Solved
Related Book For
Fundamentals of Corporate Finance
ISBN: 978-0077861629
8th Edition
Authors: Stephen A. Ross, Randolph W. Westerfield, Bradford D.Jordan
Question Posted:
Students also viewed these Corporate Finance questions
-
Using CAPM A stock has an expected return of 15 percent, its beta is 1.45, and the expected return on the market is 12 percent. What must the risk-free rate be?
-
Using CAPM A stock has an expected return of 13 percent, the risk-free rate is 4.5 percent, and the market risk premium is 7 percent. What must the beta of this stock be?
-
Asset K has an expected return of 10 percent and a standard deviation of 28 percent. Asset L has an expected return of 7 percent and a standard deviation of 18 percent. The correlation between the...
-
Julio sold his corporation to a competitor, Exeter LLC, for $100,000,000. Julio incorporated his business 17 years ago by investing $500,000 plus his proprietary know-how. There have been no other...
-
In the situation shown in Figure 7-15 (d), a spring with a force constant of 750 N/m is compressed by 4.1 cm. In figure 7-15 (a) If the speed of the block in Figure 7-15 (f) is 0.88 m/s, what is its...
-
In this exercise, you will complete the Moonbucks application that you created in Exercise 2 in Chapter 2. a. Use Windows to copy the Moonbucks Solution folder from the VB2017\Chap02 folder to the...
-
Consider a fictitious dataset of \(n=100\) observations with \(s_{y}=80\). We run a regression with three explanatory variables to get \(s=50\). a. Calculate the adjusted coefficient of...
-
Platteville Eye Clinic is considering investing in new optical-scanning equipment. It has two options: Option A would have an initial lower cost but would require a significant expenditure for...
-
You have a computer system where a customer wants the device to be changed from being a magnetic hard drive to an SSD using a M.2 interface. The desktop computer does not have a M.2 slot. Is what the...
-
On January 30 of the current year, Ashton Corporation purchased from Cathy 10% of Todd Corporation stock for $250,000 in cash. On May 30 of the following year, Andrea and Bill each exchange one-half...
-
Using CAPM A stock has a beta of 1.25 the expected return on the market is 14 percent, and the risk-free rate is 5.2 percent. What must the expected return on this stock be?
-
Using CAPM A stock has a beta of 1.30 and an expected return of 17 percent. A risk-free asset currently earns 5 percent. a. What is the expected return on a portfolio that is equally invested in the...
-
Find the domain of the Bessel function of order 0 defined by Jo(.x) - 71-0 (-1)"x2n 22n(n!)
-
You and your ex-partner have had a bitter parting of ways. One day, while walking on a busy sidewalk, you see your ex-partner walking in the opposite direction. You do your best to ignore your ex,...
-
Briefly explain two intentional torts against persons AND two intentional torts against property? What is due process, and why is it important? In your opinion, should minors be able to avoid their...
-
Using the three overarching issues related to disability, Access, Discrimination, and Communication, provide at least one example per issue that illustrates this issue within the context of the...
-
Bergo Bay's accounting system generated the following account balances on December 31. The company's manager knows something is wrong with this list of balances because it does not show any balance...
-
You came to school to learn to become an active doer. Human behavior courses seem to detract from that focus, emphasizing perspectives and theory. How do you explain why starting with different...
-
Describe the key lessons learned in each of the three case studies.
-
If (x) 0 on the interval [a, b], the definite integral gives the exact area under the curve between x = a and x = b.
-
Determine whether each of the following positions has an unlimited loss potential from adverse price movements in the underlying asset, regardless of the initial premium received. (A) Long forward...
-
If the expected rate of return for the market is not much greater than the risk-free rate of return, what is the general level of compensation for bearing systematic risk?
-
Describe the Capital Asset Pricing Model (CAPM) and what it tells us.
-
If the expected return on the market is 10 percent and the risk-free rate is 4 percent, what is the expected return for a stock with a beta equal to 1.5? What is the market risk premium for the set...
-
6x+17x-3 Evaluate the following limit: lim xo 5x2+14x-3
-
Find all the critical numbers of y=x-2x-3, then determine the local minimum and maximum points by using a graph.
-
At September 3 0 , the end of Beijing Companys third quarter, the following stockholdersequity accounts are reported. Common stock, $ 1 0 par value $ 4 8 0 , 0 0 0 Paid - in capital in excess of par...
Study smarter with the SolutionInn App