ou own $14,504 of Opsware, Inc. stock that has a beta of 3.85. You also own $20,384 of Lowe’s Companies (beta = 1.89) and $4,312 of New York Times (beta = 1.17). Assume that the market return will be 16 percent and the risk-free rate is 7 percent.What is the market risk premium? ___%What is the risk premium of each stock? (Round your answers to 2 decimal places.)Opsware’s risk premium_____.__%Lowe’s risk premium_____.__%New York Time's risk premium_____.__% What is the risk premium of the portfolio? (Do not round intermediate calculations and round your final answer to 2 decimal places.)Portfolio Risk Premium: ___.__%
ou own $14,504 of Opsware, Inc. stock that has a beta of 3.85. You also own $20,384 of Lowe’s Companies (beta = 1.89) and $4,312 of New York Times (beta = 1.17). Assume that the market return will be 16 percent and the risk-free rate is 7 percent.
What is the market risk premium? ___%
What is the risk premium of each stock? (Round your answers to 2 decimal places.)
|
What is the risk premium of the portfolio? (Do not round intermediate calculations and round your final answer to 2 decimal places.)
Portfolio Risk Premium: ___.__%
Calculation of Market Risk Premium, Risk Premium for each stock and Portfolio Risk Premium:
The market risk premium is 9%, risk premium for Opsware is 34.65%, Lowe\'s is 17.01% and New York Time\'s is 10.53% and portfolio risk premium is 22....
Image Transcriptionclose
А В 1 Market Return 16% 2 Riskfree Rate 3 Beta of Opsware 4 Beta of Lowe's 5 Beta of New York Time's 6 Investment of Opsware 7 Investment of Lowe's 8 Investment of New York Time's 9 Weight of Opsware 10 Weight of Lowe's 11 Weight of New York Time's 7% 3.85 1.89 1.17 $14,504 $20,384 $4,312 37.00% 52.00% 11.00% Market Risk Premium 12 9% Risk Premium of Opsware Risk Premium of Lowe's 15 Risk Premium of New York Time's 10.53% 13 34.65% 14 17.01% 16 Portfolio Risk Premium 22.82%
Business
Finance
Related Finance Q&A
Find answers to questions asked by student like you
Show more Q&A addQ: 1. Acme Corp. just paid a dividend of $3.00 per share (ie., D0 = $3.00). The dividend is expected t...
A: Hi there, As per Q&A guidelines, we should answer the first question when multiple questions pos...
Q: Given the following returns for Stock X and stock Y Stock X % return Stock Y % return 2 ...
A: Calculate the variance and standard deviation as follows:
Q: Purchased a home for $110,000. Today home is worth $150,000. Remaining mortgage balance is $50,000. ...
A: Market value is the value at which one person can sell the asset in the given market.
Q: Amazing Manufacturing, Inc., has been considering the purchase of a new manufacturing facility for $...
A: Please see the table below. Please be guided by the second column to understand the mathematics. Th...
Q: (Future value) Sales of a new finance book were 15,000 copies this year and were expected to increas...
A: Sales this year = S0 = 15,000 copiesAnnual growth rate in sales = g = 20%
Q: Which of the following is the best explanation of what the call premium is? Group of answer choice...
A: Call premium refers to the amount over (above) the par value of a share or bond which is payable to ...
Q: Gilmore, Inc., had equity of $130,000 at the beginning of the year. At the end of the year, the comp...
A: The maximum growth which a firm can achieve by using undistributed earnings is known as internal gro...
Q: A corporate coupon bond of 7.0 percent is callable in five years for a call premium of one year of c...
A: A callable bond is one which can be redeemed before the maturity at a call price which is above the ...
Q: The Treasury bill rate is 2% and the market risk premium is 7%. Project Beta Internal Rate of R...
A: Project costs of capital = Risk free rate + beta x Market risk premiumRisk free rate = The Treasury ...
