What is the expected rate of return of the stock

Assignment Help Finance Basics
Reference no: EM132187919

1. CAPM: A stock has a beta of 1.20, the expected market rate of return is 12%, and a risk-free rate of 5 percent. What is the expected rate of return of the stock?

= .05 + [1.20*(.12 - .05)]

Have I done the formula correctly? My end result is 13.4%

Reference no: EM132187919

Questions Cloud

Capital budgeting process : 1. What is the difference between scenario analysis and sensitivity analysis? How might you use each during the capital budgeting process?
What is the risk premium for bond : 5% coupon rate paid annually. trading at price of 937.90. the risk free rate is currently 1.5% what is the risk premium for this bond?
What is the current risk free rate : Apple Inc has a beta equal to 1.8. Average return for market portfolio has been 14%. If the required rate of return for Apple inc is 23.6%
What is delta bond risk premium : This bond is currently trading at 964.06. What is Delta's bond's risk premium?
What is the expected rate of return of the stock : A stock has a beta of 1.20, the expected market rate of return is 12%, and a risk-free rate of 5 percent. What is the expected rate of return of the stock?
What is the total amount the webster student : A Webster University student recently graduated from a Masters Program, obtained a good job and is buying a car. What is the total amount the Webster Student ca
What is the yield-to-maturity : A $10,000 face value STRIPS is currently quoted at 38:16 and has 13 years to maturity. What is the yield-to-maturity?
Why is the npv of a relatively long-term project : Why is the NPV of a relatively long-term project (one for which a high percentage of its cash flows occurs in the distant future
Patrick wacc using market-value weights : The firm has 576 shares of common stock outstanding that sell for $4 00 per share. Calculate Patrick's WACC using market-value weights.

Reviews

Write a Review

Finance Basics Questions & Answers

  Evaluate the cash assets

Evaluate the cash assets, including legal reserves, held by the Bank of America and Citi­group. How has their liquidity position changed recently?

  Is it theoretically possible to lower portfolio risk

Is it theoretically possible to lower your portfolio risk if you move your risk-free asset holdings into another risky portfolio Q?

  Find the net price by using the net decimal equivalent

Solve the problem. Round to the nearest cent. The list price of a keyboard is $788. If the trade discount series offered is 10/30/20, find the net price by using the net decimal equivalent.

  What is the optimal sharpe ratio in a portfolio

What is the optimal Sharpe ratio in a portfolio of the two assets? What is the smallest expected loss for this portfolio over the coming year with a probability of 2.5 percent?

  Create an equally weighted portfolio of five computer

create an equally weighted portfolio of five computer software stocks. is such a portfolio a diversified portfolio?

  What is the npv of the decision to purchase a new machine

What is the NPV of the decision to purchase a new machine? (Do not round intermediate calculations and round your answer to 2 decimal places. (e.g., 32.16). Enter your answer in dollars, not millions of dollars, i.e. 1,234,567.)

  Scenario analysis your firm agrico products is considering

scenario analysis. your firm agrico products is considering a tractor that would have a net cost of 36000 would

  Explain what long position in the stock

Explain what long position in the stock is necessary to hedge a short call option when the strike price is $32 and provide the number of shares purchased as a percentage of the number of options that have been sold

  What happens to the value of a perpetuity

What happens to the value of a perpetuity when interest rates increase? What happens when interest rates decrease. Explain why these changes occur.

  Present value of the interest tax shields

What is the present value of the interest tax shields from this debt? The present value of the interest tax shields is $___ million.

  Identify the underlying trend

Balliol.com recorded their opening share price for 12 consecutive weeks. Deseasonalise their results and identify the underlying trend. Forecast values for the next 6 weeks.

  Damages for psychic injuries

By the 1980s, courts were awarding damages for psychic injuries where no obvious financial damage was involved. This practice should be banned by federal laws.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd