Adequate information: Beta of the stock: 1 Expected market return: 15% To determine whether: Expected return of the stock is 15% or more than 15% or cannot be determined without the risk free rate Introduction: Expected return of the stock is given by: Expected return = Risk free rate + Beta of the security (Market return- Risk free rate)

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Answer 1

Question

Chapter 9, Problem 6PS

Summary Introduction

Adequate information:

Beta of the stock: 1

Expected market return: 15%

To determine whether:

Expected return of the stock is 15% or more than 15% or cannot be determined without the risk free rate

Introduction:

Expected return of the stock is given by:

Expected return = Risk free rate + Beta of the security (Market return- Risk free rate)

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Students have asked these similar questions

What is the expected rate of return for a stock that has a beta of 1.0 if the expected return on the market is 15%?a. 15%.b. More than 15%.c. Cannot be determined without the risk-free rate.

A stock has an expected return of 15 percent, its beta is 0.9, and the risk-free rate is 6 percent. What must the expected return on the market be?

A stock has an expected return of 14.1 percent, a beta of 1.8, and the return on the market is 9.8 percent. What must the risk-free rate be?

Answer 2

Question

Chapter 9, Problem 6PS

Summary Introduction

Adequate information:

Beta of the stock: 1

Expected market return: 15%

To determine whether:

Expected return of the stock is 15% or more than 15% or cannot be determined without the risk free rate

Introduction:

Expected return of the stock is given by:

Expected return = Risk free rate + Beta of the security (Market return- Risk free rate)

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 3

Question

Chapter 9, Problem 6PS

Summary Introduction

Adequate information:

Beta of the stock: 1

Expected market return: 15%

To determine whether:

Expected return of the stock is 15% or more than 15% or cannot be determined without the risk free rate

Introduction:

Expected return of the stock is given by:

Expected return = Risk free rate + Beta of the security (Market return- Risk free rate)

Expert Solution & Answer

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Answer 4

Question

Chapter 9, Problem 6PS

Summary Introduction

Adequate information:

Beta of the stock: 1

Expected market return: 15%

To determine whether:

Expected return of the stock is 15% or more than 15% or cannot be determined without the risk free rate

Introduction:

Expected return of the stock is given by:

Expected return = Risk free rate + Beta of the security (Market return- Risk free rate)

Expert Solution & Answer

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Answer 5

Chapter 9, Problem 6PS

Summary Introduction

Adequate information:

Beta of the stock: 1

Expected market return: 15%

To determine whether:

Expected return of the stock is 15% or more than 15% or cannot be determined without the risk free rate

Introduction:

Expected return of the stock is given by:

Expected return = Risk free rate + Beta of the security (Market return- Risk free rate)

Answer 6

Chapter 9, Problem 6PS

Summary Introduction

Adequate information:

Beta of the stock: 1

Expected market return: 15%

To determine whether:

Expected return of the stock is 15% or more than 15% or cannot be determined without the risk free rate

Introduction:

Expected return of the stock is given by:

Expected return = Risk free rate + Beta of the security (Market return- Risk free rate)

Answer 7

Chapter 9, Problem 6PS

Summary Introduction

Adequate information:

Beta of the stock: 1

Expected market return: 15%

To determine whether:

Expected return of the stock is 15% or more than 15% or cannot be determined without the risk free rate

Introduction:

Expected return of the stock is given by:

Expected return = Risk free rate + Beta of the security (Market return- Risk free rate)

Answer 8

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Answer 9

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Answer 10

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Answer 11

Ch. 9 - Prob. 1PS Ch. 9 - Prob. 2PS Ch. 9 - Prob. 3PS Ch. 9 - Prob. 4PS Ch. 9 - Prob. 5PS Ch. 9 - Prob. 6PS Ch. 9 - Prob. 7PS Ch. 9 - Prob. 8PS Ch. 9 - Prob. 9PS Ch. 9 - Prob. 10PS

Solution Summary: The author explains that as the stock has a Beta of 1 i.e. equivalent to market Beta, the expected return is 15%.

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