The Rhaegel Corporation's common stock has a beta of 1.2.f the risk-free rate is 5 percent and the expected retum on the market is 14 percent, what is the company's cost of equity capital? Multiple Choice 15.8% 16.59% 15.01% 16.43% 21.8%

Q: The Rhaegel Corporation's common stock has a beta of 1.1. If the risk-free rate is 4.2 percent and…

A: The cost of equity capital is the sum of risk-free rate plus beta. It is calculated as follows: Cost…

Q: The risk-free rate of interest, kRF, is 6 percent.  The overall stock market has an expected return…

A: The required return on the stock can be calculated as per the CAPM equation

Q: BLC Industries is expected to pay a dividend of $1.50, and the dividend is expected to grow at a…

A: The conceptual formula used:

Q: Express Steel Corporation wishes to calculate its cost of common stock equity, by using the capital…

A: CAPM is an abbreviation for capital asset pricing model which is used to determine the rate of…

Q: Calculating Cost of Equity Hoolahan Corporation's common stock hasS a beta of .87. If the risk-free…

A: The cost of capital is the return required by a company to determine if an investment meets the…

Q: FlavR Co stock has a beta of 2.15, the current risk-free rate is 2.15 percent, and the expected…

A: In the given question we are require to calculate the FlavR co's cost of equity: We can calculate…

Q: A common stock has a market value $13 million. The market value of risk free debt is $8 million. IF…

A: Market Value of Common Stock= $13 million Beta of stock= 1.3 Market Return= 15% Market Value of…

Q: Hoolahan Corporation's common stock has a beta of 1.24. Assume the risk-free rate is 4.9 percent and…

A: Formula: Cost of equity = Risk free rate + (beta*(market rate - risk free rate))

Q: A firm's stock has a beta of 1.75, Treasury bills yield 3.8%, and the market portfolio offers an…

A: The Capital Asset Pricing Model is used to determine the cost of equity with the help of following…

Q: FlavR Co stock has a beta of 2.03, the current risk-free rate is 2.03 percent, and the expected…

A: We are require to calculate the FlavR co's cost of equity in this question : We can calculate the…

Q: Suppose the risk-free rate is 3.65% and an analyst assumes a market risk premium of 7.45%. Firm A…

A: Risk free rate (Rfr) = 3.65% Market Risk Premium  = 7.45% Dividend just paid D0 = $1.71 per share…

Q: TJ Co stock has a beta of 1.64, the current risk-free rate is 5.94 percent, and the expected return…

A: In the given question we are require to calculate the TJ co cost of equity from following details:…

Q: Hoolahan Corporation's common stock has a beta of .87. Assume the risk-free rate is 3.6 percent and…

A: Risk free rate (Rf) = 3.6% Beta (B) = 0.87 Market return (Rm) = 11%

Q: 1.5%. MostDef pays $0.65 of each dividend each quarter for each share of common stock, priced at $75…

A: The dividend discount model (DDM) is used by investors to determine the price of stocks. The stocks…

Q: A firm's stock has a beta of 1.75, Treasury bills yield 3.8%, and the market portfolio offers an…

A: Risk Premium: The rate of return on an investment that is in addition to the risk-free rate of…

Q: The common stock of Buildwell Conservation & Construction Inc. (BCCI) has a beta of 0.9. The…

A: Computation of BCCI’s Cost of equity capital is shown: Formulation is shown:

Q: The DR Company’s common stock has a beta of 1.07. What is the company’s cost of equity capital if…

A: As per  Capital asset pricing model Cost of equity capital = Risk free + Beta×[Return of market -…

Q: You own $17,765 of Opsware, Inc. stock that has a beta of 3.73. You also own $24,310 of Lowe's…

A: A combination of the different types of funds and securities for the investment is term as the…

Q: Suppose the risk-free rate is 3.65% and an analyst assumes a market risk premium of 7.45%. Firm A…

A: Risk free Return (Rf)= 3.65% Market Risk Premium(Rm-Rf) =7.45% Beta of Firm B = 0.83 As per CAPM,…

Q: The Angelina Corporation's common stock has a beta of 1.8. If the risk-free rate is 4.4 percent and…

A: Cost of equity = Risk free rate + (Expected market return - Risk free rate) * Beta

Q: The common stock of Buildwell Conservation & Construction Inc. (BCCI) has a beta of 0.9. The…

A: a) Hence, the cost of equity capital is 9.40%. Working note:

Q: The common stock of Flavorful Teas has an expected return of 17.96 percent. The return on the market…

A: expected return =risk free rate + beta * (market return - risk free rate)

Q: The expected return on the market portfolio is 15%. The risk-free rate is 8%. The expected return on…

A: In the given question we need to calculate the Alpha of the stock. Alpha of the stock = Expected…

Q: Hoolahan Corporation's common stock has a beta of 1.12. Assume the risk-free rate is 4.7 percent and…

A: The rate of return that is expected by investors on their equity investment is term as the cost of…

Q: A stock is selling for $80 in the market. The company’s beta is 1.5, the market risk premium (rM -…

A: As per CAPM Re = Rf + beta x (Rm - Rf) Where: Re = return on equity. Rf = theoretical risk-free rate…

Q: The expected rate of return on a market portfolio is 7 percent. The riskless rate of interest is 4…

A: required rate of return = risk free rate + beta * (market return less risk free rate)

Q: The Graber Corporation's common stock has a beta of 1.15. The risk-free rate 3.5 percent and the…

A: Expected return =risk free rate + beta * (market return - risk free rate )

Q: The common stock of Anthony Steel has a beta of 0.80.  The risk-free rate is 5 percent and the…

A: Cost of equity : As per capital asset pricing Cost of equity is calculated by the use of risk free…

Q: the company's common stock has a beta, β, of 1.2. The risk-free rate is 6%, and the market return is…

A: Beta (β) = 1.2 Risk free rate (Rf) = 0.06 Market return (Rm) = 0.11 Cost of common equity (rs) = ?…

Q: IRQ has common stock outstanding, which is trading at $25 per share. IRQ paid a dividend yesterday…

A: Last Dividend = $2.22 Growth rate = 0.03 Current stock price = $25 Cost of common equity = ?

Q: The Nixon Corporation's common stock has a cost of capital of 12 percent. If the market risk premium…

A: The capital structure of a corporation is the combination of the sources of financing through which…

Q: A stock is selling for $80 in the market. The company’s beta is 1.5, the market risk premium (rM -…

A: First calculate the cost of equity of the stock using the CAPM model. According to the CAPM model…

Q: The Penny Corporation's common stock has a beta of 1.8. If the risk-free rate is 6.9% and the…

A: We require to calculate the Penny corporation's cost of equity capital in this question: As per…

Q: Hoolahan Corporation’s common stock has a beta of 1.11. Assume the risk-free rate is 4.6 percent and…

A: Given: Beta = 1.11 Risk free rate = 4.6% Market rate = 12.1%

Q: Annual dividend is $2.97 per share of Stock. The real risk free rate of return is 3.25%. The…

A: In this we have to use CAPM formula for calculating.

Q: The Rhaegel Corporation's common stock has a beta of 1.1. If the risk-free rate is 4.5 percent and…

A: The cost of capital is calculated using CAPM. CAPM refers to the capital asset pricing model. It…

Q: Suppose the risk-free rate is 3.65% and an analyst assumes a market risk premium of 7.45%. Firm A…

A: Cost of equity = Risk-free rate + Beta * Market risk premium

Q: ou are considering an investment in the common stock of Keller Corp. The stock is expected to pay a…

A: Cost of equity is the minimum rate of return required to earn on the equity capital in such a manner…

Q: The common stock of Flavorful Teas has an expected return of 13.92 percent. The return on the market…

A: In the given question we need to compute the beta of stock from following details : Expected return…

Q: 1. Calculating Cost of Equity The Nixon Corporation's common stock has a beta of .95. If the…

A:

Q: The risk-free rate of return is 3.9 percent and the market risk premium is 6.2 percent. If the…

A: Using CAPM Model,

Q: Suppose the risk-free rate is 3.68% and an analyst assumes a market risk premium of 7.49%. Firm A…

A: Firm A Last Dividend Paid (D0) = $1.45 Growth Rate (g) = 4.86% forever

Q: A stock is selling for $80 in the market. The company’s beta is 1.5, the market risk premium (rM -…

A: The Dividend Growth Model refers to a model that helps in calculating the intrinsic value of a stock…

Q: Wildhorse Industries common stock has a beta of 1.8. If the market risk-free rate is 4.6 percent and…

A: Cost of common stock = Risk free rate + beta * (market return - risk free rate)

Q: Diddy Corp. stock has a beta of 1.3, the current risk-free rate is 7 percent, and the expected…

A: Given: Risk free rate = 7% Beta = 1.3 Market return = 12.50%

Q: The Hudson Corporation’s common stock has a beta of 1.4. If the risk-free rate is 4.5 percent and…

A: Questions 1-2:Calculation of Cost of Equity Capital and WACC:The cost of equity capital is 13.60%…

Risk and return

Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary. 

Capital Asset Pricing Model

Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.