Answered: Texas Instruments stock has a beta of…

Texas Instruments stock has a beta of 1.38 and its expected return is 13.75% HP stock has a beta of 0.75 if the free risk rate is 4.5% what is the expected rate of return on hp stock

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter2: Risk And Return: Part I

Section: Chapter Questions

Problem 2P: AA Corporations stock has a beta of 0.8. The risk-free rate is 4%, and the expected return on the...

See similar textbooks

Related questions

Q: If the required rate of return is 8.4% p.a. compounded quarterly, which project would be preferred?…

A: The present value is used to assess future cash flows' current value. It shows the present value,…

Q: One-year Treasury bills currently earn 3.60 percent. You expect that one year from now, 1 - year…

A: According to the liquidity premium theory, the investor's assumption with respect to future interest…

Q: 4. Measuring standalone risk using realized data Returns earned over a given time period are called…

A: Standalone risk can also be regarded as the unsystematic risk which means the risk that is…

Q: e are evaluating a project that costs $800,000, has an eight-year life, and has no salvage value.…

A: NPV can be found as the difference in present value of cash flow and initial investment of projects.

Q: B eBook Problem 6-09 As chief investment officer of a small endowment fund, you are considering…

A: Asset classE(r)SDCSFIPRCurrent allocationProposed…

Q: the following cash flows: Year 0 1234 Cash Flow -$ NPV IRR 1,340,000 515,000 580,000 475,000 430,000…

A: When a cash stream that is earned out of an investment is redirected to another investment that…

Q: Kate's Candy Corporation makes chewy chocolate candles at a plant in Winston-Salem, North Carolina.…

A: Capital budgeting is a crucial financial decision-making process undertaken by businesses to…

Q: Two new software projects are proposed to a young, start-up company. The Alpha project will cost…

A: Alpha ProjectInitial Investment = $150,000Annual Net Cash Flows = $40,000Beta ProjectInitial…

Q: Identify the type of business strategy of The Boeing Company, mention below how its business…

A: The objective of the question is to identify the business strategy of The Boeing Company, how it has…

Q: 5. Recalculate the NPV using a 8 percent discount rate. (Future Value of $1. Present Value of $1.…

A: The net present value measures the current value of an investment's projected cash flows against the…

Q: A GM and a Ford bond both have 4 years to maturity, a $1, 000 par value, a BB rating and pay…

A: Par value of both bonds: $1000Coupon rate of GM: 6.3%Coupon rate of Ford: 5%GM bond price %: 92.35%

Q: A firm evaluates all of its projects by applying the IRR rule. A project under consideration has the…

A: IRR stands for internal rate of return. It is an important capital budgeting metric. It is the rate…

Q: Bluewater, Inc. has the following estimated quarterly sales for nex wear. The accounts receivable…

A: We need to use average receivables formula below to calculate expected account receivables at end of…

Q: A proposed cost-saving device has an installed cost of $530,000. It is in Class 8 (CCA rate=20%) for…

A: Working capital refers to the difference between a company's current assets and current liabilities.…

Q: 1. Interest Rate History (LO2, CFA5) Based on the history of interest rates, what is the range of…

A: Understanding the historical range of interest rates is essential for financial analysis and…

Q: Required information [The following information applies to the questions displayed below.] A pension…

A: The minimum variance portfolio refers to the mix of constituent stocks that provide the lowest risk…

Q: You manage a pension fund that will provide retired workers with lifetime annuities. You determine…

A: A.Five Year Zero Coupon Bond= $12 million Twenty Year Zero Coupon Bond= $8 million B.Fave Value of…

Q: Plymouth is looking at a new project on campus that will require an investment of $500,000. The cash…

A: The net present value refers to the capital budgeting metric which takes into account the time value…

Q: Problem 2-22 Calculating Cash Flow Use the following information for Ingersoll, Incorporated. Assume…

A: Cash flow to creditors shows the cash moving between a company and its lenders, including interest…

Q: A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a…

A: Expected returnStandard deviationStock fund (S)17%38%Bond fund (B)13%18%Risk-free return =…

Q: Your company is deciding whether to invest in a new machine. The new machine will increase cash flow…

A: NPV net preseent value is the capital budgeting techniques useful to evaluate the profitability and…

Q: 1. Imagine you get a message on Instagram from a stranger. The stranger asks you to add them as a…

A: The objective of this question is to understand the potential risks and consequences of sharing…

Q: Computer Consultants Inc. is considering a project that has the following cash flow and cost of…

A: The Modified Internal rate of return is a financial measure used to evaluate the profitability of an…

Q: Problem 9-16 Project Evaluation (LO2) Blooper Industries must replace its magnoosium purification…

A: Equivalent Annual Cost or EAC is used by businesses to evaluate the economic feasibility of various…

Q: A one-year long forward contract on a non-dividend-paying stock is entered into when the stock price…

A: The value of the forward contract 8 months later is approximately $0.91 Explanation:To calculate the…

Q: A portfolio manager believes that credit spreads are mean-reverting in the medium term. The manager…

A: The mean reverting level is a concept that states that the prices of the underlying assets will…

Q: You and spouse are filing a joint return. Your current deductions have reduced your taxable income…

A: The question is based on the progressive income tax system in the United States, which levies taxes…

Q: Mr. Hugh Warner is a very cautious businessman. His supplier offers trade credit terms of 2/12 net…

A: 2/12 indicates that there is a 2% discount if the payment is made within 12 days.Net 75 days…

Q: a. Using the IRR formula in the textbook and what is the present value factor for this investment?…

A: The internal rate of return is used to evaluate an investment's profitability by calculating the…

Q: Ten years ago, you took out a $400,000 mortgage to buy a new house. The mortgage was a 20-\\nyear,…

Q: Problem 6-21 Calculating Nominal Cash Flow Shado, Incorporated, is considering an Investment of…

A: Initial investment = $442,000Working capital = $18,500Revenue for the first year =…

Q: (Present value of a complex stream) Don Draper has signed a contract that will pay him $60,000 at…

A: Annual payments = $60,000Additional payment = $140,000Discount rate = 7%Number of years = 7To find:…

Q: E-Eyes.com has a new issue of stock it calls 20/20 preferred. The stock will pay a $20 dividend per…

A: The DDM refers to the method of calculation of the value of stock based on the future dividends that…

Q: Question 4 Which of the following are always positively related to the price of a European call…

A: As per the Q&A guidelines, if multiple questions are asked at once then the answer for only the…

Q: Ms. Susan is renovating her townhouse for a total price of $18,000. The work will be done in a month…

A: In the given case, Person S will bear the renovation cost which will be one time investment and the…

Q: AU.S. investor writes five naked call option contracts. The option price is $ 4.00, the strike price…

A: Option contractA stock option provides the right to the trader but not an obligation to purchase and…

Q: Anderson Systems is considering a project that has the following cash flow and WACC data. What is…

A: NPV means net present value of the business. It means difference between present value of cash…

Q: Kelly is a diligent mother who has just finished supporting her two children, Susan, aged 23, and…

A: (a) Annual Savings for Randy: Determine the duration: Randy will turn 30 in five years (30 - 25).…

Q: What is the coupon rate for the bond? Assume semi-annual payments. Answer as a percent! Bond Coupon…

A: Coupon rate refers to the payment that is made at every period charged on the bond amount which is…

Q: For the given cash flows, suppose the firm uses the NPV decision rule. Year 0 1 2 3 Cash Flow…

A: NPV, or Net Present Value, is a capital budgeting technique used to assess the feasibility of a…

Q: JL Enterprises has 90,000 shares of stock outstanding with a book value of $1,343,000 and a market…

A: Given: ParticularsAmountShares outstanding90000Book value$1,343,000Market value$1,560,000Fixed…

Q: Beacon Company is considering automating its production facility. The initial investment in…

A: Net Present Value (NPV) is a financial metric used to determine the profitability of an investment.…

Q: Alexander will take a trip using $5500 of his investment funds that return 8% per year. To pay for…

A: Here,Value of Own Fund (Vo) is $5,500Value of Borrowed Fund (VB) is $10,000Total Funds required for…

Q: Richmond Rent-A-Car is about to go public. The investment banking firm of Tinkers, Evers & Chance is…

A: The price-to-earnings (P/E) ratio is a financial metric used to evaluate the relative value of a…

Q: You observe the following yield curve for Treasury securities: Maturity Yield 1 Year 4.80% 2 Years…

A: A forward rate is a predicted interest rate for a future period, based on current market conditions.…

Q: Consider the following $1,000 par value zero-coupon bonds: Bond Years to Maturity YTM (%) A 5.2% B…

A: yield to maturity refers to the interest rate charged by the bank or financial institution over the…

Q: The following table shows the nominal returns on Brazilian stocks and the rate of inflation. Year…

A: a.Standard deviation = 35.71% b.Average real return = -3.28%Explanation:Step 1:Calculating the…

Q: Using the unpaid balance method, find the current month's finance charge on a credit card account…

A: The Finance charge is basically the expense or cost which one incurs whether being the individual,…

Q: pension fund manager is considering three mutual funds. The first is a stock fund, the second is a…

A: Expected return of stock fund (S)24%Expected return of bond funds (B)12%Money market fund…

Q: A company produces three products Good, Better, and Best. All the three products areprocessed from a…

A: The term "financial advantage" generally refers to a favorable position or benefit in terms of…

Question

Texas Instruments stock has a beta of 1.38 and its
expected return is 13.75% HP stock has a beta of 0.75 if
the free risk rate is 4.5% what is the expected rate of
return on hp stock

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1: Definition of Capital Asset Pricing Model

VIEW

Step 2: Computation of expected return

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

AA Corporations stock has a beta of 0.8. The risk-free rate is 4%, and the expected return on the market is 12%. What is the required rate of return on AAs stock?
A stock's beta equals 1.34. If the risk-free rate is 1.3% and the market risk premium is 5.9%, what return should be required on this stock if the CAPM model holds? O 8.41% O 9.21% O 7.48% O 10.04% Onone of these
A stock has a beta of 1.68, the expected return on the market is 14.72, and the risk-free rate is 4.65. What must the expected return on this stock be? O 15.67 percent O 16.75 percent O 17.10 percent O 18.46 percent 21.57 percent
A stock has an expected return of 14.3 percent, the risk-free rate is 3.2 percent, and the market risk premium is 8.1 percent. What must the beta of this stock be? O 0.88 O 0.94 O 1.08 O 1.21 O 1.37
A certain stock has a beta of 1.2. If the risk-free rate of return is 4.5 percent and the market risk premium is 8 percent, what is the expected return of the stock? What is the expected return of a stock with a beta of 1.08? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) Beta of 1.2 expected return % Beta of 1.08 expected return %
Question: A stock has an expected return of 9.7 percent, its beta is .89, and the risk-free rate is 2.9 percent. What must the expected return on the market be?
Stock R has a beta of 1.5, Stock S has a beta of 0.75, the expected rate ofreturn on an average stock is 13%, and the risk-free rate is 7%. By howmuch does the required return on the riskier stock exceed that on the lessrisky stock?
Assume that the risk-free rate is 7.5% and the market risk premium is 8%. What is the required return for the overall stock market? Round your answer to one decimal place. ? % What is the required rate of return on a stock with a beta of 0.4? Round your answer to one decimal place. ? %
A stock has a beta of .88 and an expected return of 8.49 percent. If the risk-free rate is 2.4 percent, what is the stock's reward-to-risk ratio? 9.65% O6.06% 8.28% 6.92% 6.39 %
What is the expected return for Stock A if it has a beta of 1.25, the risk-free rate is 1.5%, and the expected market return is 10.2%? 12.38% 14.25% 12.75% 11.25% 10.88%
A stock has a beta of 1.78 The risk free rate is 1.314% and the market risk premium is 5% What is the fair return on the stock? I
What is the required rate of return on a stock with a beta of 1.2, when the risk-free rate is 3.6% and the rate on the stock market is 14.4%