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- The current risk-free rate of return in the economy is 6%, in addition, the market rate of return is 8.5 percent given this information what would the expected return be on a common stock with a systemic risk level of 1.3?(Expected rate of return using CAPM) a. Compute the expected rate of return for Acer common stock, which has a 1.8 beta. The risk-free rate is 5 percent and the market portfolio (composed of New York Stock Exchange stocks) has an expected return of 13 percent. b. Why is the rate you computed the expected rate? ... a. The expected rate of return for Acer common stock is %. (Round to one decimal place.)Given the following: the Prime is 8.1 %, the FED funds rate is 6.9%, 90 day T-Bills are yielding 5.2%, the average return on all stocks traded on the NYSE is 11.7%, what would be the nominal rate of return?
- Subject :- Account News Corporation (US stock) has a beta of 1.37 and a required rate of return of 10.21%. If you are using CAPM and the risk-free rate of return is 3.0 percent, what is the implied expected market risk premium for the US stock market?The stock of AlphaFish has a beta equal to 1.28. If U.S. T-bills return 5% and the market risk premium is 8%, the expected return on AlphaFish is: a. 10.24 b. 15.24 c. 16.40 d. 11.40 e. 16.64(Expected rate of return using CAPM) a. Compute the expected rate of return for Intel common stock, which has a 1.5 beta. The risk-free rate is 4 percent and the market portfolio (composed of New York Stock Exchange stocks) has an expected return of 13 percent. b. Why is the rate you computed the expected rate? a. The expected rate of return for Intel common stock is%. (Round to one decimal place.)
- The risk-free rate of return is currently 0.02, whereas the market risk premium is 0.07. If the beta of RKP, Inc., stock is 1.6, then what is the expected return on RKP? Round to three decimal places.The current risk-free rate of return, rRF, is 4 percent and the market risk premium, RPM, is 8 percent. If the beta coefficient associated with a firm's stock is 1.6, what should be the stock's required rate of return? Round your answer to one decimal place. ´%Suppose the rate of return on short-term government securities (perceived to be risk-free) is about 7%. Suppose also that the expected rate of return required by the market for a portfolio with a beta of 1 is 13%. According to the capital asset pricing model: a. What is the expected rate of return on the market portfolio? (Round your answer to 2 decimal places.) b. What would be the expected rate of return on a stock with β = 0? (Round your answer to 2 decimal places.) c. Suppose you consider buying a share of stock at $47. The stock is expected to pay $3.5 dividends next year and you expect it to sell then for $49. The stock risk has been evaluated at β = –.5. Is the stock overpriced or underpriced? A. Underpriced B. Overpriced
- 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. ? %The Treasury bill rate is 4.9%, and the expected return on the market portfolio is 11.1%. Use the capital asset pricing model. What is the risk premium on the market? (Enter your answer as a percent rounded to 1 decimal place.) What is the required return on an investment with a beta of 1.2? (Enter your answer as a percent rounded to 2 decimal places.) If an investment with a beta of 0.46 offers an expected return of 8.7%, does it have a positive NPV? If the market expects a return of 12.2% from stock X, what is its beta? (Round your answer to 2 decimal places.)Using CAPM to determine the expected rate of return for risky assets, consider the following example stocks, assuming that you have already compute the betas Stock Beta A 0.70 B 1.00 C 1.15 D 1.40 E -0.30 Assume that we expect the economy’s RFR to be 5 percent (0.05) and the expected return on the market portfolio (E(RM)) to be 9 percent (0.09), 1, what would this imply? With these inputs, what would the be the following required rate of returns for these five stocks, show the formula for each in your calculations.
