Assume that the risk-free rate is 6.5% and the required return on the market is 10%. What is the required rate of return on astock with a beta of 2? Round your answer to two decimal places.%

To calculate the required rate of return on a stock, we need to use capital asset pricing model…

Answered: Assume that the risk-free rate is 6.5%…

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter8: Risk And Rates Of Return

Section: Chapter Questions

Problem 15PROB

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Similar questions

You have observed the following returns over time: Assume that the risk-free rate is 6% and the market risk premium is 5%. What are the betas of Stocks X and Y? What are the required rates of return on Stocks X and Y? What is the required rate of return on a portfolio consisting of 80% of Stock X and 20% of Stock Y?
An analyst has modeled the stock of a company using the Fama-French three-factor model. The market return is 10%, the return on the SMB portfolio (rSMB) is 3.2%, and the return on the HML portfolio (rHML) is 4.8%. If ai = 0, bi = 1.2, ci = 20.4, and di = 1.3, what is the stock’s predicted return?
APT An analyst has modeled the stock of Crisp Trucking using a two-factor APT model. The risk-free rate is 6%, the expected return on the first factor (r1) is 12%, and the expected return on the second factor (r2) is 8%. If bi1 = 0.7 and bi2 = 0.9, what is Crisp’s required return?
The current risk-free rate of return, rRF, is 2 percent and the market risk premium, RPM, is 8 percent. If the beta coefficient associated with a firm's stock is 1.4, what should be the stock's required rate of return? Round your answer to one decimal place. _______ ´%
Hastings Entertainment has a beta of 0.70. If the market return is expected to be 16.40 percent and the risk-free rate is 7.40 percent, what is Hastings’ required return? (Round your answer to 2 decimal places.) Hastings’ required return %
Paycheck, Inc. has a beta of 1.02. If the market return is expected to be 16.90 percent and the risk-free rate is 9.90 percent, what is Paycheck’s risk premium? (Round your answer to 2 decimal places.) Paycheck's Risk Premium: ___.__%

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Assume that the risk-free rate is 6.5% and the required return on the market is 10%. What is the required rate of return on a stock with a beta of 2? Round your answer to two decimal places.