A stock has an expected return of 13.3 percent, its beta is 1.45, and the expected return on the market is 10.5 percent. What must the risk-free rate be?

Q: A stock has an expected return of 14.3 percent, the risk-free rate is 3.9 percent, and the market…

A: Given: Expected return = 14.3% Risk free rate = 3.9% Market risk premium = 7.8%

Q: Suppose Autodesk stock has a beta of 2.20, whereas Costco stock has a beta of 0.72. If the risk-free…

A: Portfolio Return is that under which investor will invest his money in more than one stock of the…

Q: Apex Roofing's stock has a beta of 1.50, its required return is 14.00%, and the risk-free rate is…

A: In the given question we need to compute the required rate of return on stock market from following…

Q: A stock has a beta of 1.19 and an expected return of 11.27 percent. If the risk-free rate is 3.4…

A: Given: Beta = 1.19 Expected return = 11.27% Risk free rate = 3.4%

Q: The expected return on the market is 15% and the risk-free rate of return is 5%. If the Beta of the…

A: In given question we need to compute the expected rate of return for stock using CAPM.

Q: Using CAPM A stock has an expected return of 13 percent, the risk-free rate is 4.5 percent, and the…

A: Given details are : Expected return = 13% Risk free rate = 4.5% Market risk premium = 7% We need to…

Q: The risk-free rate of return is currently 0.02, whereas the market risk premium is 0.05. If the beta…

A: Given information: Risk free rate of return is 0.02 Market risk premium is 0.05 Beta value of stock…

Q: Zacher Co.'s stock has a beta of 0.82, the risk-free rate is 4.25%, and the market risk premium is…

A: Required rate of return = Risk free rate + beta * market risk premium

Q: The current risk-free rate of return, rRF, is 2 percent and the market risk premium, RPM, is 8…

A: Risk free rate = 2% Marker risk premium = 8% Beta = 1.40

Q: A stock has an expected return of 10.8 percent, its beta is .97, and the risk-free rate is 6.1…

A: Capital asset pricing model (CAPM) describes the relationship between the risk and return of the…

Q: A stock has an expected return of 15 percent, its beta is 0.9, and the risk-free rate is 6 percent.…

A: Given the following information: Expected return on stock (r) = 15% Beta (b) = 0.9 Risk free rate…

Q: A stock has an expected return of 13.1 percent, its beta is 1.70 and the risk free premium rate is…

A: Risk market return is used in CAPM model to calculate expected return on the stock and it is also…

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: A stock has an expected return of 13.1 percent, a beta of 1.28, and the expected return on the…

A: Given details are : Expected return on stock = 13.1% Beta = 1.28 Expected market return (Rm) = 11%…

Q: A stock has an expected return of 13.4 percent, its beta is 1.60, and the risk-free rate is 5.5…

A: We require to compute the expected market return (Rm) from following details : Expected return on…

Q: Assume that the risk-free rate is 6 percent and the expected return on the market is 13 percent.…

A: Given details are : Risk free rate (Rf) = 6% Expected return on market (Rm) = 13% Beta of stock =…

Q: A stock has an expected return of 14.1 percent, a beta of 1.8, and the return on the market is 9.8…

A: Expected return (Re) = 14.1% Beta (B) = 1.8 Market return (Rm) = 9.8% Risk free rate = Rf

Q: A stock has an expected return of 13.2 percent, the risk-free rate is 3.5 percent, and the market…

A: According to capital asset pricing model: rs=rf+beta×rm-rfwhere,rs=expected returnrm-rf=market risk…

Q: Assume that the risk-free rate is 5 percent and the market risk premium is 6 percent. What is the…

A: This question has two parts: First we need to compute the Expected return of overall stock market…

Q: A stock has an expected return of 11 percent, its beta is 95, and the risk-free rate is 6 percent.…

A: We need to use CAPM to calculate expected rate of return. The equation is Ri=Rf + Beta(Rm-Rf) Where…

Q: A stock has an expected return of 7.72 percent, the risk-free rate is 2.9 percent, and the market…

A: We can calculate Beta by using the CAPM model as it helps in showing the relationship between the…

Q: A stock has an expected return of 14.3 percent, the risk-free rate is 3.2 percent, and the market…

A: Formula Expected return = Risk free rate+(Beta*Market risk premium) Where Expected return = 14.3%…

Q: A stock has a beta of 1.68, the expected return on the market is 14.72, and the risk-free rate is…

A: As per CAPM formula Expected return on stock = Risk free return + Beta*(Market return-Risk free…

Q: A stock has an expected return of 13.5 percent, its beta is 1.16, and the expected return on the…

A: Expected return = 13.5%  Beta = 1.16 Market return = 12.50%

Q: A stock has an expected return of 13.1%, its beta is 1.70, and the risk free premium rate is 2.6%.…

A: In the given question we require to calculate the expected return on market from the following…

Q: A stock has an expected return of 14 percent, its beta is 1.45, and the expected return on the…

A: In this question we need to compute the risk free rate. We can solve this question using CAPM…

Q: JaiLai Cos. stock has a beta of 0.7, the current risk-free rate is 6.1 percent, and the expected…

A: CAPM model provides formula that calculates the expected return on stock based on its level of risk.…

Q: A stock has an expected return of 9.9 percent, the risk-free rate is 1.8 percent, and the market…

A: Expected return = 9.9% Risk free rate = 1.8% Market risk premium = 4.3%

Q: Consider the CAPM. The risk-free rate is 6%, and the expected return on the market is 18%. What is…

A: In the given question we need to calculate the expected return on a stock using CAPM i.e. Capital…

Q: The stock of Big Joe's has a beta of 1.62 and an expected return of 13.20 percent. The risk-free…

A: The company is analyzing required rate of return for the portfolio by calculating it with the market…

Q: A stock has an expected return of 13.6 percent, the risk-free rate is 3.7 percent, and the market…

A: In the above question we require to compute the expected beta of the stock. This question can be…

Q: Suppose the risk-free return is 4.5% and the market portfolio has an expected return of 10.3% and a…

A: According to the market scenario, the stock prices are keep on changing with the changing market…

Q: A stock has an expected return of 11.5 percent, the risk-free rate is 3.2 percent, and the market…

A: Expected return of a stock can be computed by using capital asset pricing model: Here, Expected…

Q: What is the expected return for ABC Stock if the risk-free rate is 3.0%, the market risk premium is…

A: The mathematical representation of the formula is:

Q: A stock has a beta of 1.12, the expected return on the market is 10.6 percent, and the risk-free…

A: A model that represents the relationship of the required return and beta of a particular asset is…

Q: A stock has an expected return of 11.0%, its beta is 0.95, and the risk-free rate is 6.00%. What…

A: In the given question we require to calculate the expected return on market from following details:…

Q: The risk-free rate of return is 4 percent and the market risk premium is 8 percent. What is the…

A: In given question we need to compute the expected rate of return for stock.

Q: The risk-free rate of return is currently 0.02, whereas the market risk premium is 0.07. If the beta…

A: Capital Pricing Model (CAPM) is an investment theory that shows the relationship between the…

Q: A stock has an expected return of 11.25 percent, a beta of 0.82, and the expected return on the…

A: Capital asset pricing model is used to compute the expected return from a stock: Here, Expected…

Q: Consider the CAPM. The risk-free rate is 5%, and the expected return on the market is 15%. What is…

A: In the above question we need to calculate the value of beta. Looking at the information given in…

Q: A stock has a beta of 1.23, the expected return on the market is 11.9 percent, and the risk-free…

A: the expected return on this stock = risk free rate + beta*market risk premium

Q: A stock has a beta of 0.7 and an expected return of 7.3 percent. If the risk-free rate is 1.3…

A: Beta = 0.7 Expected return = 7.3% Risk free rate = 1.3%

Q: A stock has an expected return of 12.7 percent and a beta of 1.18, and the expected return on the…

A: Given information: Expected return is 12.7% Beta value is 1.18 Expected return on market is 11.7%

Q: a. A stock has a beta of 1.2, the expected return on the market is 17 percent, and the risk-free…

A: Following details are given to us: Beta = 1.2 Expected return on Market = 17% Risk free rate= 8% We…

Risk and return

Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary. 

Capital Asset Pricing Model

Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.