Stock R has a beta of 1.9, Stock S has a beta of 0.45, the required return on an average stock is 8%, and the risk-free rate of return is 3%. By how much does the required return on the riskier stock exceed the required return on the less risky stock? Round your answer to two decimal places.

Q: A stock has an expected return of 12.4%, the risk-free rate is 6.5%, and the market risk premium is…

A: In the given problem we require to calculate the Beta of the stock using following details: Expected…

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: Assume that the risk-free rate is 7.5% and the required return on the market is 11%. What is the…

A: Risk free rate = 7.5% Market return = 11% Beta = 2

Q: Stock R has a beta of 1.9, Stock S has a beta of 0.35, the expected rate of return on an average…

A: Expected Rate of return on average stock = Risk free Rate + beta * Market risk premium 9% = 7% + 1 *…

Q: A stock has an expected return of 16.5 percent, its beta is 1.50, and the risk-free rate is 4.5…

A: Given that the expected return on a stock is 16.5%, risk free rate is 4.5% and the beta is 1.50, we…

Q: Stock R has a beta of 1.5, Stock S has a beta of 0.95, the required return on an average stock is…

A: Required rate of return is defined as the minimum return regarding an investor, which is used to…

Q: A stock has a beta of 1.38, the expected return on the market is 10 percent, and the risk- free rate…

A: Expected return using CAPM model can be calculated using following formula :- Expected return = Risk…

Q: Assume that the risk-free rate is 7.5% and the market risk premium is 5%. What is the required…

A: We need to use CAPM equation to calculate required rate of return. The equation is  rs =Rf+beta…

Q: Assume that the risk-free rate is 3.5% and the expected return on the market is 10%. What is the…

A: Details given to us are : Risk free rate = 3.5% Expected return on market = 10% Beta = 0.7 We need…

Q: A stock has a required return of 13%, the risk-free rate is 4.5%, and the market risk premium is 4%.…

A: In order to calculate the stock's beta, we can use the the formula given under capital asset pricing…

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: Assume that the risk-free rate is 4.5% and the required return on the market is 11%. What is the…

A: Calculation of required rate of return on stock

Q: A stock has a beta of 1.75, the expected return on the market is 15%, and the risk- free rate is 5%.…

A: In the given question we require to calculate the expected return on stock: According to Capital…

Q: A stock has an expected return of 15.6 percent, the risk-free rate is 6.2 percent, and the market…

A: The beta of the stock can be calculated with the help of CAPM equation.

Q: A stock has an expected return of 14.2 percent, the risk-free rate is 6.5 percent, and the market…

A: Given: Expected return = 14.2% Risk free rate = 6.5% Market risk premium = 7.7%

Q: Assume that the risk-free rate is 7.5% and the market risk premium is 8%. What is the required…

A: The required rate of return can be ascertained by using the Capital Asset Pricing Model (CAPM). The…

Q: Assume that the risk-free rate is 7.5% and the required return on the market is 13%. What is the…

A: CAPM describes the relationship between systematic risk and expected return for assets, particularly…

Q: When the return on the market portfolio goes up by 5%, the return on Stock A goes up on average by…

A: Return is the basic factor which affects the investor’s decision. CAPM is the tool which is used to…

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: Assume that the risk-free rate is 2.5% and the required return on the market is 13%. What is the…

A: Capital Asset Pricing Model (CAPM) is a fundamental portfolio and security selection model , to find…

Q: A stock has a beta of 1.38, the expected return on the market is 10%, and the risk- free rate is 5%.…

A: Following details are given in the question : Beta of stock = 1.38 Expected return on the market =…

Q: A stock has a beta of 1.55, the expected return on the market is 8%, and the risk-free rate is 15%.…

A: In the given question we are require to calculate the Expected return We can calculate the expected…

Q: A stock has a beta of 1.15, the expected return on the market is 10.9 percent, and the risk-free…

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

Q: A stock has an expected return of 12.4 percent, the risk-free rate is 6.5 percent, and the market…

A: According to CAPM : beta of stock = ( expected return - risk free rate)/market risk premium

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: Using the CAPM, estimate the appropriate required rate of return for the three stocks listed here,…

A: In the given question we are required to calculate the Required rate of return of three stocks i.e.…

Q: A stock has an expected return of 12 percent, the risk-free rate is 5 percent, and the market risk…

A: The beta of stock can be calculated with the help of below expression:

Q: A stock has a beta of 0.65, the expected return on the market is 15%, and the risk- free rate is 8%.…

A: In the given problem we require to calculate the expected return on stock: According to CAPM i.e.…

Q: Required Rate of Return Stock R has a beta of 1.8, Stock S has a beta of 0.35, the expected rate of…

A: Beta coefficient shows the systematic risk of the assets. The beta factor shows the systematic risk…

Q: Assume that the risk-free rate is 7.5% and the required return on the market is 10%. What is the…

A: The question is based on the concept of the capital asset pricing model (CAPM), the model explains…

Q: A stock has an expected return of 15.6 percent, the risk-free rate is 6.2 percent, and the market…

A: Information Provided: Expected Return = 15.6% Risk-free rate = 6.2% Market Risk Premium = 7.7%

Q: Snow Fooling stock has an expected return of 8.17 percent and its reward-to-risk ratio is 6.9…

A:

Q: Stock X has a beta of 2.5, Stock B has a beta of 0.65, the required return on an average stock is…

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

Q: Assume that the risk-free rate is 5.5% and the required return on the market is 12%. What is the…

A: According to CAPM model: rstock=rf+βstock×rm-rf where, rf=risk free return rm = market return…

Q: Stock R has a beta of 1.5, Stock S has a beta of 0.75, the expected rate ofreturn on an average…

A: The riskiness of security is measured by "Beta". Beta measures the volatility of the stock with…

Q: stock has a beta of 1.14, the expected return on the market is 10.8 percent, and the risk-free rate…

A: Beta=1.14 Return is market =10.8% Risk free rate =4.55%

Q: Assume that the risk-free rate is 2.5% and the required return on the market is 12%. What is the…

A: We need to use CAPM equation for calculation of required rate of return. The equation is…

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: Stock R has a beta of 1.7, Stock S has a beta of 0.8, the required return on an average stock is…

A: The question is based on the concept of the capital asset pricing model (CAPM). CAPM explains the…

Q: Suppose Autodesk stock has a beta of 2.10, whereas Costco stock has a beta of 0.72. If the risk-free…

A: Portfolio beta = weighted average beta of the stocks it consists

Q: Assume the expected return on the market is 9 percent and the risk-free rate is 4 percent. What is…

A: CAPM Model: Expected return on Stock = Risk free Rate + Beta x ( Market risk Premium) Market risk…

Q: Two stocks, A and B, have beta coefficients of 0.8 and 1.4, respectively. If the expected return on…

A: The evaluation of the systematic risk or volatility of a stock or the portfolio as compared to the…

Q: A stock has an expected return of 11.85 percent, its beta is 1.08, and the risk-free rate is 3.9…

A: Investors have different options to make investments, and the motive behind investments is to…

Q: A stock has an expected return of 15.4 percent, the risk-free rate is 6.1 percent, and the market…

A: Expected return (Er) = 0.154 Risk free rate (Rf) = 0.061 Market risk premium (Mp) = 0.079 Beta (b) =…

Q: A stock has a beta of 1.4 and an expected return of 12.7 percent. If the risk-free rate is 4.9…

A: Following details are given to us in the question : Beta = 1.4 Expected Return (ER) = 12.7% Risk…

Q: Using CAPM, A stock has an expected return on 10.7 percent, the risk-free rate is 4.1 percent, and…

A: In this question we need to calculate the Beta of the stock from the details given. We can solve…

Q: A stock has a beta of 1.04, the expected return on the market is 11.75, and the risk-free rate is…

A: A stock is a financial security issued by companies to raise equity funds from the primary market.…

Q: Required Rate of Return Stock R has a beta of 1.4, Stock S has a beta of 0.45, the expected rate of…

A: Beta is one of the measure of volatility or risk of the stock. More beta means more risk and less…

Q: A stock has a beta of 1.04, the expected return on the market is 10 percent, and the risk- free rate…

A: Cost of equity: It can be defined as the rate of return that is provided by the company to its…