User Account

All Pages

Beta and required rate of return-what is the stock beta

Assignment Help Financial Management
Reference no: EM131512325

Beta and required rate of return

A stock has a required return of 13%; the risk-free rate is 5%; and the market risk premium is 4%.

What is the stock's beta? Round your answer to two decimal places. ____?

If the market risk premium increased to 9%, what would happen to the stock's required rate of return? Assume that the risk-free rate and the beta remain unchanged.

a. If the stock's beta is equal to 1.0, then the change in required rate of return will be less than the change in the market risk premium.

b. If the stock's beta is greater than 1.0, then the change in required rate of return will be greater than the change in the market risk premium.

c. If the stock's beta is less than 1.0, then the change in required rate of return will be greater than the change in the market risk premium.

d. If the stock's beta is greater than 1.0, then the change in required rate of return will be less than the change in the market risk premium.

e. If the stock's beta is equal to 1.0, then the change in required rate of return will be greater than the change in the market risk premium.

New stock's required rate of return will be ____%. Round your answer to two decimal places.

Reference no: EM131512325

Questions Cloud

Expected and required rates of return : What is the required return for the overall stock market? What is the required rate of return on a stock with a beta of 2.3?
Expecting the firm to experience a constant rate of growth : Would your decision to purchase share of Yoshida’s common stock change if, rather than expecting the firm to experience a constant rate of growth,
Describe the parts of your personal philosophy : Explain why you chose to watch this particular theorist's video.Describe the parts of your personal philosophy where you agree or disagree with this theorist.
Calculate the rate of heat transfer per square meter : Consider a journal bearing using the oil of Prob. Let the journal diameter be 7:6cm, the clearance be 0.025 ern, and the rpm be 3600.
Beta and required rate of return-what is the stock beta : A stock has a required return of 13%; the risk-free rate is 5%; and the market risk premium is 4%. What is the stock's beta?
A comprehensive analysis of the data : A comprehensive analysis of the data.A review of the validity of the data and the findings.
Considering establishing an engineering computing center : An auto-part manufacturer is considering establishing an engineering computing center.
What is the terminal cash flow for project : what is the terminal cash flow for this project: You have bought a espresso machine for $100,000. It has a depreciable life of 5 years with zero salvage.
Write a comment related to the risk factor : The patients acuity was high and so was their fall risk. Part of our assessment included a fall risk factor based on numbers.

Reviews

Write a Review

Financial Management Questions & Answers

  Current spot rate for the covered interest arbitrage

A foreign exchange trader for Green Valley Capital, are exploring covered interest arbitrage opportunities between Euros and US Dollars ($) for the next 60 days. You have 1million euros or $ 1.1 million at the current spot rate for the covered intere..

  What is the current bond price

Sqeekers Co. issued 11-year bonds a year ago at a coupon rate of 7.7 percent. The bonds make semiannual payments and have a par value of $1,000. If the YTM on these bonds is 6 percent, what is the current bond price?

  Liquidity risk-interest rate risk and credit risk

liquidity risk; interest rate risk; and credit risk

  Accounting break-even level of sales

What is the accounting break-even level of sales if the firm pays no taxes? (Do not round intermediate calculations. Round your answer to the nearest whole number.)

  Evaluating capital budgeting project

Conventional corporation is evaluating a capital budgeting project that will generate $600,000 per year for the next 10 years. The project costs $3.6 million and conventional's required rate of return is 11 percent. Should the project be purchased?

  What are the benefits of repurchasing shares

Share repurchase proposal: Currently, the firm has available capital (cash and net income) of approximately $5,000,000. There is a large block of stock available at $25 a share. What are the benefits of repurchasing shares? How will this affect the c..

  What is the beta of the portfolio

The Index Portfolio has invested in three stocks with the following beta and dollar amount of investment. The markets expected return is 13% and the risk free rate is 5%. What is the beta of the portfolio? What is the expected return of the portfolio..

  Clinic is professional service corporation operated

Linda is a doctor that has worked for a well-respected clinic for the last two years. The clinic is a professional service corporation operated as a C corporation. She has now been offered an equal ownership interest in the C Corporation and a limite..

  What is the yield to maturity and yield to call

A firm's bonds have a maturity of 10 years with a $1,000 face value, have an 8% coupon rate paid semi annually, and are callable in 5 years at $1050. They currently sell at a price of $1,100. What is the yield to call? What is the yield to maturity?

  Trend analysis-common sizing and forecasting data

I need a brief explanation of the following; Trend Analysis, Common Sizing, and forecasting data and Using Comparative data

  Calculate your portfolios new beta

Your retirement fund consists of a $7,500 investment in each of 20 different common stocks. The portfolio's beta is 1.25. Suppose you sell one of the stocks with a beta of 1.0 for $7,500 and use the proceeds to buy another stock whose beta is 1.15. C..

  After the dividend-total market value of the firm equity

The total market value of the common stock of The ABC Inc. is $670,000. The market price per share is $38. Assume the firm pays a cash dividend with a total value of $42,000. Ignore taxes. After the dividend, the total market value of the firm's equi..

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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