Required rate of return on a stock with beta

Assignment Help Financial Management
Reference no: EM13921039

Assume that the risk-free rate is 6% and that the market risk premium is 8%. What is the required rate of return on a stock with a beta of 1.3? SHOW ALL WORK AND EXPLAIN ANSWER.

Reference no: EM13921039

Questions Cloud

Decision to stick with both types of grass : The company has 130,000 square yards of growing space available. In the past year, the company dedicated 65,000 square yards to fescue and 65,000 square yards to Bermuda grass. What is the opportunity cost of the president's decision to stick with bo..
Are small jobs less profitable than they were in the past : Diamonds, Etc. manufactures jewelry settings and sells them to retail stores. In the past, most settings were made by hand, and the overhead allocation rate in the prior year was $12 per labor hour ($2,400,000 overhead /200,000 labor hours). Assume t..
Find the balance of the loan right : Houston Corporation has borrowed $2 million from San Antonio National Bank with the following terms: San Antonio National Bank will charge interest at .6% per month on unpaid balance. Find the balance of the loan right after the 15th payment. Show so..
Required return on the riskier stock exceed : Stock R has a beta of 2.1, Stock S has a beta of 0.55, the expected rate of return on an average stock is 9%, and the risk-free rate is 7%. By how much does the required return on the riskier stock exceed the required return on the riskier stock exce..
Required rate of return on a stock with beta : Assume that the risk-free rate is 6% and that the market risk premium is 8%. What is the required rate of return on a stock with a beta of 1.3?
Assume we make a valuation of the same bond : Assume we make a valuation of the same bond 5 years from now. Required rate of return did not change. Find the present value of all future payments, including par value, that will be paid to the investor 15 years from now. How the value of the bond w..
The beta associated with a risk free asset : The beta associated with a risk free asset ___.
What is the dividend yield and the capital gains yield : Assume, the stock is sold for $10.50. The dividend just paid is $1 and expected to grow at the rate of 5% annually. What is the required return? What is the dividend yield? What is the capital gains yield?
What is the price of the bond now : Several years ago, Castles in the Sand Inc. issued bonds at face value of $1,000 at a yield to maturity of 5.0%. Now, with 5 years left until the maturity of the bonds, the company has run into hard times and the yield to maturity on the bonds has in..

Reviews

Write a Review

Financial Management Questions & Answers

  What is the after-tax return on municipal bonds

Municipal bonds are currently offering investors a 6% return and corporate bonds with the same maturity and default risk are offering investors an 8% return. What is the after-tax return on municipal bonds for an investor in the 30% tax bracket?

  Real dollars in an account when you retire

You want to have $8 million in real dollars in an account when you retire in 40 years. The nominal return on your investment is 6.32 percent and the inflation rate is 2.94 percent. What real amount must you deposit each year to achieve your goal?

  Determining the cost of capital

The Oceanic Corporation, a Chesapeake, VA based company, was established in 1994. Glenn Rodgers III founded the corporation, which was privately owned at the time, after his retirement from Norentech Corporation. Comment on Stephanie’s assumptions as..

  In an efficient market-price of a security

In an efficient market, the price of a security will:

  Delay in integrating the acquired business

Delay in integrating the acquired business can contribute to which of the following?

  The value of any asset

The value of any asset is the ________.

  Compute current price of bonds if present yield to maturity

The Lone Star Company has $1,000 par value bonds outstanding at 10 percent interest. The bonds will mature in 20 years. Compute the current price of the bonds if the present yield to maturity is: 6 percent? 9 percent? 13 percent? Three total answers ..

  Depreciated straight-line to zero over seven-year tax life

Consider an asset that costs $675,500 and is depreciated straight-line to zero over its seven-year tax life. The asset is to be used in a four-year project; at the end of the project, the asset can be sold for $136,900.

  What is the yield to maturity of a bond that sells

What is the yield to maturity of a bond that sells for $1,045 today and pays $30 every six months and matures in 12 years if bonds issued today are paying $40.00 annually?

  Credit card statement-explain what this number means

Highlight APY (APR) at your bank statement, or credit card statement. Explain what this number means. Find current 30 years mortgage interest rate. Calculate APR, if mortgage payment is made monthly. Then calculate APR, if mortgage payment is made bi..

  What is the duration of this bond

A bond currently sells for $1,120, which gives it a yield to maturity of 5%. Suppose that if the yield increases by 25 basis points, the price of the bond falls to $1,070. What is the duration of this bond?

  1 the eurusd spot exchange rate is quoted as 132250-132267

1. the eurusd spot exchange rate is quoted as 1.32250-1.32267. how many eur are needed to purchase 100000000 usd on

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