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A:
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A: Given: Beta = 0.65 Market return = 11%= 0.11 Risk free rate = 4% = 0.04
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A: Given: A firm has the beta value of 1.2
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A: Term value is calculated using the following formula:
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A: The required rate of return can be calculated with the help of CAPM equation.
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Q: A new company has a beta of 0.8. Their risk free rate is 4% and the market risk premium is 9%. What…
A: Beta = 0.8 Risk Free Rate = 4% Market Risk Premium = 9%
Q: 9) Firm X and Y each have a beta of 1.5 and 2.5. If their expected return (cost of equity) is each…
A: CAPM = Rf + Beta ( Rm - Rf)
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A: The market return can be calculated as follows :
Q: assume that the risk free interest rate is 3%, the market rate of return is 7% and the beta for the…
A: As per CAPM, Required rate of return = Risk free Rate + Beta * (Market Return - Risk free Rate)
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A: Calculation of required rate of return:Answer:The required rate of return is 8.425%
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A: We are require to calculate the required rate of return: Required rate of return can be calculated…
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A: In the given question we need to compute the expected return of stock XYZ:
Q: the capital asset pricing model.
A: The Capital Asset Pricing Model (CAPM) is a very popular model used in finance to describe the…
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A: In finance beta is a measure of volatility or systematic risk. Beta shows the volatility of returns…
Q: CAPM Required Return A company has a beta of 1.14. If the market return is expected to be 11.9…
A: Formula: Required rate of return = Risk free rate + [Beta X (Market Rate – Risk free rate)]
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A: Following details are given in the question: Risk free rate = 3% Beta coefficient = 1.2 Required…
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Q: Which of the following statements is true?
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A: Required return = risk free rate + beta * market retrun - beta* risk free rate
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Q: A security has a beta of 1.20. Is this security more or less risky than the market? Explain. Assess…
A: The beta of a stock is the degree of responsiveness to movements in price with changes in the stock…
If a company’s beta were to double, would its required return also double?
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- A firm whose performance is sensitive to economy-wide changes will likely have a beta risk that:Select one:a. Is less than 1.b. Is zero.c. Exceeds 1.d. Is exactly 1.How would I do the same calculation if Beta is 1.2? That would be 1-1.2= -0.2 invested in the money market. How does that make sense?A firm wishes to assess the impact of changes in the market return on an asset that has a beta of 1.1. a. If the market return increased by 13%, what impact would this change be expected to have on the asset's return? b. If the market return decreased by 9%, what impact would this change be expected to have on the asset's return? c. If the market return did not change, what impact, if any, would be expected on the asset's return? d. Would this asset be considered more or less risky than the market?
- Interpreting beta A firm wishes to assess the impact of changes in the market return on annasset that has a beta of 1.20“If the business cycle is predictable, and a stock has a positive beta, the stock’s returns also must be predictable.” Respond.The SML implies that if you could find an investment with a negative beta, its expected return, E(k), would be: E(k) < 0 E(k) < k f 0 < E(k) < k f kF < E(k) < E(kM)
- Which of the following statements is true? A company with a Beta less than 1.0 has a higher expect return than the market return A company with a Beta of 1.0 should have an expected return equal to an index fund. A roughly equal number of companies have positive Betas versus those with negative Betas The market Beta is 9%A greater Beta suggests investors will require a ________return.If investors’ aversion to risk increased, would the risk premium on a high-beta stock increase more or less than that on a low-beta stock? Furthermore, If a company’s beta were to double, would its expected return double? Explain in detail.
- What does a share’s beta of 1.5 mean? Is this share more or less volatile than the market? Explain your answer.Can you explain what levered beta is and how to to calculate it. Also whow levered beta is connected to D/E ratio. What if i dont have the D/E ratio for a company and i only have the levered beta. How do i know the differenceSuppose the beta coefficient of a stock doubles from B1= 1.0 to B2=2.0. Logic says that the required rate of return on the stock should also double, Is this correct?