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: ___.__%

Question

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: ___.__%

Expert Answer

Want to see the step-by-step answer?

See Answer

Check out a sample Q&A here.

Want to see this answer and more?

Experts are waiting 24/7 to provide step-by-step solutions in as fast as 30 minutes!*

See Answer
*Response times vary by subject and question complexity. Median response time is 34 minutes and may be longer for new subjects.

Related Finance Q&A

Find answers to questions asked by student like you
Show more Q&A

Q: 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 ...