The expected return on the market portfolio is 15%. The risk-free rate is 8%. The expected return on SDA Corp. common stock is 16%. The beta of SDA Corp. common stock is 1.25. Within the context of the capital asset pricing model, SDA Corp. stock's alpha is
Q: The Treasury bill rate is 4%, and the expected return on the market portfolio is 12%. Using the…
A: Risk free rate = 4% Market return = 12% Beta of stock X = 1.5
Q: Based on Capital Asset Pricing Model (CAPM), calculate the return on market portfolio if the Nestle…
A: The required rate of return can be ascertained by using the Capital Asset Pricing Model (CAPM). The…
Q: The Gravel Corporation's common stock has a beta of 0.5. If the risk-free rate is 7.9% and the…
A: Following details are given in the question: Beta = 0.5 Risk free rate = 7.9% Expected return on…
Q: The required rate of return on the Cosmos Corporation's common stock is 10%, the current real rate…
A:
Q: he financial controller is considering the use of the Capital Asset Pricing Model as a surrogate…
A: CAPM: Capital asset pricing model Under this model ris free return is used along with Beta and…
Q: The Angelina Corporation’s common stock has a beta of 1.6. If the risk-free rate is 4.7 percent and…
A: The provided information are: Beta = 1.6 Risk free rate = 4.7% Expected return = 13%
Q: If the risk free rate is 6 %, the expected return on the market portfolio is 12% and the beta of…
A: The Capital Asset Pricing Model (CAPM) is the model which shows the relationship between the…
Q: Plaid Pants, Inc. common stock has a beta of 0.90, while Acme Dynamite Company common stock has a…
A: The question is multiple choice question.Plaid Pants, Inc. common stock has a beta of 0.90, while…
Q: Based on current dividend yields and expected capital gains, the expected rates of return on…
A: The capital asset pricing model (CAPM) refers to the model which tells us how the financial markets…
Q: calculate the cost of equity for the Collins Company using the capital asset pricing model.
A: Given information is: Assume that the Collins Company has a beta of 1.8 and that the risk-free rate…
Q: Based on current dividend yields and expected growth rates, the expected rates of return on stocks A…
A: Given that;For stock A:Expected return is 11%Standard deviation is 10% Beta is 0.8
Q: What is the company’s cost of common stock, rs?
A: Given information is: The common stock of Anthony Steel has a beta of 0.80. The risk-free rate is 5…
Q: The risk-free rate of interest is 2.1% and the market return is 9%. Howard Corporation has a beta of…
A: Risk free rate (Rf) = 0.021 Market return (Rm) = 0.09 Beta (b) = 1.75 Required return = ?
Q: Suppose that the risk-free rate is 3.00% per annum. In addition, assume that the market portfolio…
A: Since you have posted a question with multiple sub-parts, we will solve the first three sub- parts…
Q: Currently, the risk free return is 5 percent and the expected market rate of return is 12 percent.…
A: The expected return of portfolio can be calculated with the help of CAPM equation. The beta in the…
Q: CEPS Group stock has a beta of 1.05. The risk-free rate of return is 5.25 percent and the market…
A: Beta = 1.05 Risk free rate = 5.25% Market risk premium =9%
Q: The stock of Jones Trucking is expected to return 16 percent annually with a standard deviation of 7…
A: The question is related to Expected Return of Portfolio. It is calculated with the help of following…
Q: A stock has a beta of 1.2 and an expected return of 11.8 percent. A risk-free asset currently earns…
A: Portfolio refers to basket of different financial assets in which investment is made by single…
Q: need help
A: A.Calculate the alpha of portfolios as follows:Portfolio A:
Q: If the risk free rate is 4 %, the expected return on the market portfolio is 1296 and the beta of…
A: Financial management consists of directing, planning, organizing and controlling of financial…
Q: The expected rate of return on a market portfolio is 7 percent. The riskless rate of interest is 4…
A: required rate of return = risk free rate + beta * (market return less risk free rate)
Q: Need help
A: The formula to calculate required return is given below:
Q: Fisher Co.'s stock has a beta of 1.40, the risk-free rate is 4.25%, and the market risk premium is…
A: Required rate of return is defined as the minimum return to the investor, where he will going to…
Q: ZR Corporation’s stock has a beta coefficient equal to 1.8 and a required rate of return equal to 16…
A: Beta =1.8 Required return =16% Market return =10%
Q: Deming Corporation utilizes the capital asset pricing model (CAPM) to estimate the cost of its…
A: Market Rate of Return = 10% Beta = 1 Risk Free Rate = 5%
Q: "The market capitalization rate on the stock of Aberdeen Wholesale Company is 11%, Its expected ROE…
A: Financial accounting: Financial accounting is the process of recording, summarizing, and reporting…
Q: Currently, the risk-free return is 4 percent, and the expected market rate of return is 11 percent.…
A: In this we have to calculate the beta of portfolio and from that we will get expected return of…
Q: A portfolio is invested 25 percent in Stock G, 65 percent in Stock J, and 10 percent in Stock K. The…
A: portfolio return =∑n rn×wnwhere,rn=return of stock wn=weights of stockn=number of stocks in…
Q: y where the risk-free interest rate is 19% and the expected return of the market is 25%, the beta…
A: A. The expected returns can be calculated as follows : Calculations for above :
Q: B24&Co stock has a beta of 1.66, the current risk-free rate is 3.16 percent, and the expected return…
A: Here, Risk Free Rate is 3.16% Beta is 1.66 Expected Return on the Market is 10.66%
Q: You have a portfolio that is invested 15 percent in Stock A, 48 percent in Stock B, and 37 percent…
A: Given, Weight of stock A = 15% or 0.15 stock B = 48% or 0.48 stock…
Q: FlavR Company stock has a beta of 2.14, the current risk-free rate is 2.14 percent, and the expected…
A: Beta = 2.14 Risk free rate = 2.14% Market return = 9.14%
Q: The common stock of Peeta Inc. has an expected return of 15.0%, the risk-free rate is 3.20%, and the…
A: Calculate the beta as follows:
Q: Unthank Corp. has a volatility of 15% and a correlation with the market portfolio of 0.5. If the…
A: The expected return of the stock can be calculated with the help of CAPM equation.
Q: The Treasury bill rate is 6%, and the expected return on the market portfolio is 10%. According to…
A: Given information: Treasury bill rate is 6% Expected return on market portfolio is 10% Market…
Q: Assume that temp force has a beta coefficient of 1.2, that the risk-free rate (the yield on T-bonds)…
A: The required rate of return on a financial asset represents the minimum return investors willing to…
Q: Ice Company stock has a beta of 1.92, the current risk-free rate is 5.17 percent, and the expected…
A: Beta = 1.92 Risk free rate = 5.17% Market return = 15.17%
Q: Currently, the risk-free return is 3 percent, and the expected market rate of return is 9 percent.…
A: Given information: Risk free return is 3% Expected market rate of return is 9%
Q: There are only shares of A and B companies in the market. Currently, the market value of A and B…
A: 1. State Probability Ra Ra2 Ra2p Rb Rb2 Rb2p 1 0.3 0.30 0.09 0.027 0.20 0.04 0.012 2 0.4 0.15…
Q: B24&Co stock has a beta of 1.60, the current risk-free rate is 3.10 percent, and the expected return…
A: In the given question we require to calculate the cost of equity for B24&co
Calculate alpha
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
- Using the equity asset valuation model (CAPM) equation, determine the required return for the shares of the following companies, if the market return is 7.50% (Rm = 7.50%) and the risk-free asset return is 1.25% (RF = 1.25%). You must show all counts. Stock Beta SKT 0.65 COST 0.90 SU 1.42 AMZN 1.57 V 0.94An analyst gathers the following data: * Expected (estimated) rate of return on the market = 15% * Risk Free Rate = 8% * Expected (estimated) rate of return on stock X = 17% * Stock X's beta = 1.75 Using these data and the capital asset pricing model, which of the following statements about X's stock is true? Stock X is: a. properly valued b. overvalued by 1.75% c. undervalued by 1.40% d. undervalued by 0.25%Assume that the risk-free rate of return is 4% and the market risk premium (ie., Rm - Re) is 89%. If use the Capital Asset Pricing Model (CAPM) to estimate the expected rate of return on a stock with a beta of 128, then this stock's exoected return should be A) 10.53% B) 14.24% 23.15% D) 6.59%
- An investor is evaluating the common share of Bulldogs Inc. which has a beta of 1.8. The expected return for the securities market as a whole is 8%. The risk-free rate on a treasury bill is 2%. Based on the capital asset pricing model, what is the expected risk adjusted return of the Bulldogs Inc.’s common share? (Format: X.XX%)The risk-free rate is 1.45% and the market risk premium is 5.21%. According to the Capital Asset Pricing Model (CAPM), a stock with a beta of 1.13 will have an expected return of ________%. 1) 5.56% 2) 13.25% 3) 15.66% Ⓒ4) 9.12% 5) 7.34%Assume that the Collins Company has a beta of 1.8 and that the risk-free rate of return is 2.5 percent. If the equity-risk premium is six percent, calculate the cost of equity for the Collins Company using the capital asset pricing model.
- Stock A has an expected return of 13.52 percent. Stock B has an expected return of 9.24 percent. Assuming the Capital Asset Pricing Model holds, and Stock A's beta is greater than Stock B's beta by 0.32, what is the expected market risk premium (in percent)? Answer to two decimalsAssume for parts (a) to (h) that the Capital Asset Pricing Model holds. The marketportfolio has an expected return of 5%. Stock A’s return has a market beta of 1.5, anexpected value of 7% and a standard deviation of 10%. Stock B’s return has amarket beta of 0.5 and a standard deviation of 20%. The correlation between stockA’s and stock B’s return is 0.5.Required:a) Explain the term ‘capital asset pricing model.’b) What is the risk-free rate?c) What is the expected return on stock B?d) Draw a graph with expected return on the y-axis and beta on the x-axis. Indicate the approximate position of the risk-free asset, the market portfolio and stocks A and B on this graph. Draw the line, which connects these four points.e) Explain the term ‘Securities Market Line’, and what is the slope of the SML for this economy?f) Consider a portfolio with a weight of 50% in stock A and 50% in stock B. What are its variance and expected return?g) Where would under-priced and over-priced securities plot on…Plaid Pants, Inc. common stock has a beta of 0.90, while Acme Dynamite Company common stock has a beta of 1.80. The expected return on the market is 10 percent, and the risk-free rate is 6 percent. According to the capital-asset pricing model (CAPM) and making use of the information above, the required return on Plaid Pants' common stock should be , and the required return on Acme's common stock should be . A. 3.6 percent; 7.2 percent B. 9.6 percent; 13.2 percent C. 9.0 percent; 18.0 percent D. 14.0 percent; 23.0 percent E. Answer not given
- Plaid Pants, Inc. common stock has a beta of 0.90, while Acme Dynamite Company common stock has a beta of 1.80. The expected return on the market is 10 percent, and the risk-free rate is 6 percent. According to the capital-asset pricing model (CAPM) and making use of the information above, the required return on Plaid Pants' common stock should be _____ , and the required return on Acme's common stock should be____ .b) You are given the following information about Stock X and the market: The annual effective risk-frec rate is 5%. The expected return and volatility for Stock X and the market are shown in the table below: Expected Return Volatility Stock X 5% 40% Market 8% 25% The correlation between the returns of stock X and the market is -0.25. Assume the Capital Asset Pricing Model holds. Calculate the required return for Stock X and determine if the investor should invest in Stock X.(Capital Asset Pricing Model) The expected return for the general market is 10.5 percent, and the risk premium in the market is 6.8 percent. Tasaco, LBM, and Exxos have betas of 0.809, 0.677, and 0.578, respectively. What are the appropriate expected rates of return for the three securities? Question content area bottom Part 1 The appropriate expected return of Tasaco is enter your response here%. (Round to two decimal places.) Part 2 The appropriate expected return of LBM is enter your response here%. (Round to two decimal places.) Part 3 The appropriate expected return of Exxos is enter your response here%. (Round to two decimal places.)