### Exceed the required return on the less risky stock

Assignment Help Financial Management
##### Reference no: EM13925187

Required rate of return

Stock R has a beta of 1, Stock S has a beta of 0.65, the expected rate of return on an average stock is 13%, and the risk-free rate of return is 5%. By how much does the required return on the riskier stock exceed the required return on the less risky stock? Round your answer to two decimal places.

%

#### Questions Cloud

 About the portfolio beta : An individual has \$15,000 invested in a stock with a beta of 0.3 and another \$55,000 invested in a stock with a beta of 1.9. If these are the only two investments in her portfolio, what is her portfolio's beta? Do the atoms of the peptide group lie in the same plane : Do the atoms of the peptide group lie in the same plane? Bond valuation-what is the bonds price : Nungesser Corporation's outstanding bonds have a \$1,000 par value, a 8% semiannual coupon, 9 years to maturity, and an 7.5% YTM. What is the bond's price? What are the atoms that constitutes the peptide group : What are the atoms that constitutes the peptide group? Exceed the required return on the less risky stock : Stock R has a beta of 1, Stock S has a beta of 0.65, the expected rate of return on an average stock is 13%, and the risk-free rate of return is 5%. By how much does the required return on the riskier stock exceed the required return on the less risk.. Nmr nuclear magnetic resonance : NMR (Nuclear Magnetic Resonance) steps:-->N.B: NMR permits the study of proteins in solution and therefore does not require preparation of crystals. Expected and required rates of return : Assume that the risk-free rate is 4.5% and the market risk premium is 5%. What is the expected return for the overall stock market? What is the required rate of return on a stock with a beta of 2.1? Required rate of return : Required rate of return Assume that the risk-free rate is 4.5% and the expected return on the market is 12%. What is the required rate of return on a stock with a beta of 0.8? X-ray crystallography steps : X-Ray crystallography steps: -->N.B: X-ray crystallography can deteremine the 3D structure of a protein without prior knowledge of the a.a. sequence.

### Write a Review

#### Compute the guaranteed euro proceeds from the american sale

Compute the guaranteed euro proceeds from the American sale if Airbus decides to hedge using a forward contract and  At what future spot exchange do you think Airbus will be indifferent between the option and money market hedge?

#### Firm is contemplating-order processing costs

Your firm is contemplating the purchase of a new \$625,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth \$69,000 at the end of that time. You will save \$255,000 before..

#### Price one should pay to produce a yield rate

A bond with a par value of \$1000 has annual coupons at the end of each year for 10 years. The initial coupon rate is 7% and each coupon is 3% greater than the preceding coupon. The bond is redeemed for \$1200 at the end of 10 years. Find the price one..

#### What will be cost of equity of xyz

What is XYX's cost of equity before the change in capital structure and what will be cost of equity of XYZ under the new capital structure?

#### Firm sell to break-even on a cash basis

The Motor Works is considering an expansion project with estimated annual fixed costs of \$71,000, depreciation of \$38,500, variable costs per unit of \$17.90 and an estimated sales price of \$26.50 per unit. How many units must the firm sell to break-e..

#### Discuss the difference between book values and market values

Discuss the difference between book values and market values and explain which one is more important to the financial manager and why.

#### What are the issues surrounding too big to fail

What are the issues surrounding too big to fail? Is it possible for Congress to simply outlaw TBTF institutions? Why or why not?

#### Horizon value of constant growth portion of firms dividends

Orwell Building Supply just paid a \$2 dividend. The dividends are expected to grow at 30% for the first year, 25% for the second year, and then 15% for the third year. After which, the long-run rate is expected to be 6%. What is the expected dividend..

#### Operating expense or a capital expenditure

Determine if each of the following would be an operating expense or a capital expenditure.

#### Loan must be repaid in equal monthly payments

A commercial bank will loan you \$32,234 for 5 years to buy a car. The loan must be repaid in equal monthly payments at the end of the month. The annual interest rate on the loan is 14.30 percent of the unpaid balance. What is the amount of the monthl..

#### What is the present value of this commitment

When Marilyn Monroe died, ex-husband Joe DiMaggio vowed to place fresh flowers on her grave every Sunday as long as he lived. The week after she died in 1962, a bunch of fresh flowers that the former baseball player thought appropriate for the star c..

#### Best estimate of the companys cost of equity

Suppose a firm just issued a dividend of \$2.50 per share on its common stock. The firm's dividends have been growing a 5% rate. IF the stock currently sells for \$65, what is your best estimate of the company's cost of equity?