User Account

All Pages

Required return on riskier stock exceed

Assignment Help Financial Management
Reference no: EM13808531

Required Rate of Return

Stock R has a beta of 1.4, Stock S has a beta of 0.75, the expected rate of return on an average stock is 13%, and the risk-free rate is 5%. By how much does the required return on the riskier stock exceed the required return on the riskier stock exceed that on the less risky stock? Round your answer to two decimal places.

Reference no: EM13808531

Questions Cloud

Nonconstant growth valuation : A company currently pays a dividend of $2.75 per share (D0 = $2.75). It is estimated that the company's dividend will grow at a rate of 19% per year for the next 2 years, then at a constant rate of 6% thereafter.
How the ruling in the case impacts the lives of americans : hese individuals serve life-long appointments once they are nominated by the President and confirmed by the United States Senate. Below are a list of some of the most controversial decisions in the last few decades by the Supreme Court.
What is the value per share of boehms stock : Boehm Incorporated is expected to pay a $2.20 per share dividend at the end of this year (i.e., D1 = $2.20). The dividend is expected to grow at a constant rate of 3% a year. The required rate of return on the stock, rs, is 17%. What is the value per..
American society and globalized economy : A description of at least 200 words about what do think a lawyer does, and what role a lawyer plays, and what role a lawyer should play, in the 21st century American society and globalized economy.
Required return on riskier stock exceed : Stock R has a beta of 1.4, Stock S has a beta of 0.75, the expected rate of return on an average stock is 13%, and the risk-free rate is 5%. By how much does the required return on the riskier stock exceed the required return on the riskier stock exc..
What is your return on portfolio : Your stock portfolio consists of two stocks. You have $15,000 in Company A and $25,000 in Company B. Company A has an actual return of -8% and Company B has a return of 12%. What is your return on portfolio?
Organization principal general manager : Which of the following is the organization's principal general manager?
What kinds of assumptions interfere with critical thinking : What kinds of assumptions interfere with critical thinking
What were some of basquiat inspirations : 1) What were some of Basquiat's inspirations for his paintings? 2) How did Basquiat's paintings evolve during his short but prolific career? 3) What made Basquiat different from other artists of his generation? (Please cite evidence from the document..

Reviews

Write a Review

Financial Management Questions & Answers

  What is the best estimate of the current stock price

A company paid $1.65 dividend yesterday. Its dividend growth rate is expected to be constant at 22.40% for 2 years, after which dividends are expected to grow at a rate of 6.85% forever. Its required return (rs) is 10.55%. What is the best estimate o..

  What is the duration of this bond

A bond currently sells for $1,050, which gives it a yield to maturity of 6%. Suppose that if the yield increases by 25 basis points, the price of the bond falls to $1,025. What is the duration of this bond?

  Prepare a balanced scorecard

Explore the need for organisations to calculate and manage performance against objectives, as well as the potential effectiveness of tools such as Balanced Scorecards and Strategy Maps as aids in this cause.

  Bond equivalent yield and discount yield

The treasurer of a large corporation wants to invest $36 million in excess short-term cash in a particular money market investment. The prospectus quotes the instrument at a true yield of 4.48 percent; that is, the EAR for this investment is 4.48 per..

  Cash-strapped young professional

A cash-strapped young professional offers to buy your car with four, equal annual payments of $3000, beginning two years from today. Assuming you're indifferent to cash versus credit, that you can invest at 10%, and that you want to receive $9000 for..

  Stock number of shares price expected return

You have a portfolio with the following: Stock Number of Shares Price Expected Return W 775 $ 48 11% X 675 25 15 Y 425 61 13 Z 650 46 14 Required: What is the expected return of your portfolio? (Do not round intermediate calculations. Enter your answ..

  Primary task response your first task is to post your own

part 1primary task response your first task is to post your own key assignment outline to the discussion area so that

  Estimate that a passive portfolio invested to mimic

Assume that you manage a risky portfolio with an expected rate of return of 17% and a standard deviation of 27%. The T-bill rate is 7%. You estimate that a passive portfolio invested to mimic the S&P 500 stock index yields an expected rate of return ..

  You have been provided with the accounts of tulip

your organization has a canteen tulip refractory serving hot meals snacks and refreshments during the working day. at

  What is the equity multiplier and return on equity

Locker Company has a debt-equity ratio of .65. Return on assets is 9.8 percent, and total equity is $850,000. What is the equity multiplier? Return on equity? Net income?

  Wilson wonders bonds have 12 years remaining to maturity

wilson wonders bonds have 12 years remaining to maturity. interest is paid annually the bonds have a 1000 par value and

  Year-end the exchange rate should be approximately

The spot rate for the Argentine peso is $0.3600 per peso. Over the year, inflation in Argentina is 10 percent and U.S. inflation is 4 percent. If purchasing power parity holds, at year-end the exchange rate should be approximately ______________ doll..

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