The rate of return on the U.S. government treasury bill is 0.03 and the expected rate of return on the Wilshire 5,000 is 0.08 . What is the required rate of return for a stock with a Beta 1.14?
Q: The Treasury bill rate is 4%, and the expected return on the market portfolio is 12%. Using the…
A: Risk free rate = 4% Market return = 12% Beta of stock X = 1.5
Q: Suppose the rate of return on short-term government securities (perceived to be risk-free) is about…
A: a) Given: Expected rate of return on portfolio E(RP) = 12% Portfolio beta = 1 Risk free rate =5%…
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A: Details given to us are : Risk free rate = 3.5% Expected return on market = 10% Beta = 0.7 We need…
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A: Hi! Thank you for the question, As per the honor code, we are allowed to answer one question at a…
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A:
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Q: The Treasury bill rate is 6%, and the expected return on the market portfolio is 10%. According to…
A: Expected Return on Market = 10% Risk free Rate = 6%
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A: Cost of equity = Risk free rate + beta * market risk premium Cost of equity = 5.60% + (0.9*5%) Cost…
Q: You are considering an investment in Justus Corporation's stock, which is expected to pay a dividend…
A: Required rate of return: Required return = Risk free rate+Beta*Market risk premium Required return =…
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A: Calculation of required return: = Risk free rate + Beta (Market rate - Risk free rate)
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…
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A: Holding period return = Dividend paid + ( Price at year 1 - Price at year 0 ) / Price at year 0
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A: “Hey, since there are multiple questions posted, we will answer first question. If you want any…
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A: Capital invested in the business comes with the respective cost called the cost of capital. It…
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A: Hello. Since your question has multiple parts, we will solve the first question for you. If you want…
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A: The beta for entire portfolio is calculated below:
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Q: Suppose the rate of return on short-term government securities (perceived to be risk-free) is about…
A: according to CAPM model: rs=rf+βs×rm-rfwhere,rf= risk free returnrm= market returnβs= beta
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A: This question require us to compute the expected return on the market i.e. Rm
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A: Given information T bill rate = 3.5% (risk free rate) Market risk premium= 8% Beta…
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A: Composite Index Starting Position = 3500 Composite Index Closing Position = 4266 Risk Free Rate…
Q: Suppose that two factors have been identified for the U.S. economy: the growth rate of industrial…
A: Current expected return=15%Beta of IP=2.8Beta of IR=2.2
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- You are given the following long-run annual rates of return for alternative investment instruments: U.S. Government T-bills 3.50% [0.0048] Large-cap common stock 11.75 [ ] Long-term corporate bonds 5.50 [ ] Long-term government bonds 4.90 [ ] Small-capitalization common stock 13.10 [ ] The annual rate of inflation during this period was 3 percent. Compute the real rate of return on these investment alternatives.The expected return on a share of ExxonMobil stock in the U.S. is 15.6% while the expected return on a share of Royal Dutch Shell stock is 12.6% in the Netherlands. If the pure rate of return is 2% in both countries and the required risk premium is 6% for each company's stock, what is the long-term expected inflation rate in each country if the multiplicative form of the Fisher model is used in making the calculations?For the cost of equity (stock) is it better to use the current US Treasury bill rate or a longer-termgovernment bond rate as the risk-free rate of return?Does the rate you use as the risk-free rate have an impact on what market premium might beappropriate? Historically, large-company stocks have earned an average return of 12.1% per annum, while US Treasury bills and long-term government bonds have earned average returns of 3.5% and5.9% respectively.
- If expected inflation in the U.S. is 8%, expected inflation in France is 12%, and the one-year risk-free rate in the U.S. is 4%, what would the one-year risk-free rate have to be in France for real interest rate parity to hold? A company has total book value of common stock equal to $650000, a par value of $1 per share, 150000 shares issued and outstanding, and the market value of the common stock is $85 a share. a. What is the company's additional paid-in capital? b. What is the market capitalization?If the risk-free rate is 2.2 percent, the inflation rate is 1.9 percent, and the market rate of return is 6.8 percent, what is the amount of the risk premium on a U.S. Treasury bill?The market has an expected rate of return of 11.6 percent. The long-term government bond is expected to yield 4.8 percent and the U.S. Treasury bill is expected to yield 1.0 percent. The inflation rate is 3.2 percent. What is the market risk premium? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
- Roundall dollar answers to 2 decimal places and record all interest rate, coupon rate and growth rate answers as a percentrounded to one decimal place 40. If the expected return on the market portfolio (i.e., Rm) is 18%, if the risk-free rate (i.e., Rf) is 8% and if thebeta of Homton, Inc. stock is 1.75, what is the equilibrium expected rate of return on Homton’s stockaccording to the Capital Asset Pricing Model (CAPM)? (Record your answer rounded to 1 decimal place; forexample, record 18.29654% as 18.3).41. If the beta of Braxton, Inc. stock is 1.51, the risk-free rate (Rf) is 3.5%, and the market risk premium is 4.8%,what is the equilibrium expected rate of return on Braxton’s stock according to the Capital Asset PricingModel (CAPM)? (Record your answer rounded to 1 decimal place; for example, record 18.29654% as 18.3)A Swiss stock has a monthly risk of 0.01 and the CHF/$ exchange rate has a monthly risk of 0.1. The correlation of these two risks is 0.22. What is the annual risk of a US investment into this stock to three decimal places in decimal terms (eg. 5.1% = .051)It trades on the NYSE and its operations are based in the United States Current yield on a U.S. 10-year treasury is 2.5% The average excess historical annual return for U.S. stocks is 7.5% The beta of the stock is 1.25 (meaning its average return is 1.25x as volatile as the S&P500 over the last 2 years) What is the expected return of the security using the CAPM formula?
- Suppose that you have the following utility function: U=E(r) – ½ Aσ2 and A=3 Suppose that you have $10 million to invest for one year and you want to invest that money into ETFs tracking the S&P 500 (US) and S&P/TSX 60 (Canada) index, which are often used as proxies for the US and Canadian stock markets, respectively, and the Canadian one-year T-bill. Assume that the interest rate of the one-year T-bill is 0.35% per annum. You have found two ETFs that you are interested in. From a set of their historical data between 2001 and 2019, you have estimated the annual expected returns, standard deviations, and covariance as follows: ETFUS : E(r)= 0.070584 0.173687 ETFCDA : E(r)= 0.073763 0.16816 Covariance between ETFUS and ETFCDA = 0.02397 Answer the following questions using Excel: What is the optimal portfolio of ETFUS and ETFCDA? Also submit an Excel file to show your work.Suppose that you have the following utility function: U=E(r) – ½ Aσ2 and A=3 Suppose that you have $10 million to invest for one year and you want to invest that money into ETFs tracking the S&P 500 (US) and S&P/TSX 60 (Canada) index, which are often used as proxies for the US and Canadian stock markets, respectively, and the Canadian one-year T-bill. Assume that the interest rate of the one-year T-bill is 0.35% per annum. You have found two ETFs that you are interested in. From a set of their historical data between 2001 and 2019, you have estimated the annual expected returns, standard deviations, and covariance as follows: ETFUS : E(r)= 0.070584 0.173687 ETFCDA : E(r)= 0.073763 0.16816 Covariance between ETFUS and ETFCDA = 0.02397 Answer the following questions using Excel: Determine your optimal asset allocation among ETFUS , ETFCDA , and T-bill, in percentage and in dollar amounts. Also submit an Excel file to show your…Suppose that you have the following utility function: U=E(r) – ½ Aσ2 and A=3 Suppose that you have $10 million to invest for one year and you want to invest that money into ETFs tracking the S&P 500 (US) and S&P/TSX 60 (Canada) index, which are often used as proxies for the US and Canadian stock markets, respectively, and the Canadian one-year T-bill. Assume that the interest rate of the one-year T-bill is 0.35% per annum. You have found two ETFs that you are interested in. From a set of their historical data between 2001 and 2019, you have estimated the annual expected returns, standard deviations, and covariance as follows: ETFUS : E(r)= 0.070584 0.173687 ETFCDA : E(r)= 0.073763 0.16816 Covariance between ETFUS and ETFCDA = 0.02397 Answer the following questions using Excel: Draw the opportunity set offered by these two securities (with increments of 0.01 in weight). Hint: In Excel, calculate the portfolio expected return and…