User Account

All Pages

Stock has required return-what is the stock beta

Assignment Help Financial Management
Reference no: EM131517003

A stock has a required return of 13%; the risk-free rate is 3%; 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.

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.

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.

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.

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.

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.

-Select-IIIIIIIVVItem 2

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

Reference no: EM131517003

Questions Cloud

Mainframe computer-would like to know depreciation schedule : A company uses MACRS depreciation. It has decided to purchase a mainframe computer and would like to know the depreciation schedule.
What would be the total return of the bond in percent : What would be the total return of the bond in percent?
Calculate the npv of this project : Nata, Inc., is considering the purchase of a $412,000 computer with an economic life of five years. Calculate the NPV of this project.
Why there is a need for the statement of cash flows : discuss why there is a need for the statement of cash flows and how is the statement of cash flows used by companies.
Stock has required return-what is the stock beta : A stock has a required return of 13%; the risk-free rate is 3%; and the market risk premium is 4%. What is the stock's beta?
What is the value of stock today : If the required return on Computech is 14%, what is the value of the stock today?
Annual risk-free rate : The annual risk-free rate in the United States is 3.51 percent, and the annual risk-free rate in Norway is 5.21 percent.
What was the purchase price of the stock : What was the purchase price of the stock if the total rate of return for the period was 32%?
What is the contribution margin of the product : What is the contribution margin of the product? Calculate the breakeven point in unit sales and dollars.

Reviews

Write a Review

Financial Management Questions & Answers

  What is the cash conversion cycle

What is the Cash Conversion Cycle (CCC)? Name the components of the CCC and explain why the CCC is important to business. Name and describe the three functions of managerial finance. For each, give an example other than those used in the text and lec..

  Bond values will change when interest rates change

If the coupon rate on an outstanding bond is lower than the relevant current interest rate, then the yield to maturity will be: Which one of the following bond values will change when interest rates change?

  Leveraged and unleveraged capital structure

Kelso Electric is debating between a leveraged and an unleveraged capital structure. The all equity capital structure would consist of 40,000 shares of stock. The debt and equity option would consist of 25,000 shares of stock plus $280,000 of debt wi..

  Calculate the after tax cost of the call premium

Calculate the tax savings that are expected from the unamortized portion or the old bonds' flotation cost.- Calculate the after-tax cost of the call premium that is required to retire the old bonds.

  Cost of equity the earnings-dividends and common stock price

Cost of Equity The earnings, dividends, and common stock price of Shelby Inc. are expected to grow at 5% per year in the future. Shelby's common stock sells for $26.00 per share, its last dividend was $2.00, and the company will pay a dividend of $2...

  Differences between hedge funds and mutual funds

Describe the differences between hedge funds and mutual funds? Specify the differences with respect to each of the following: A. Investors B. Regulation C. Fees for Managers D. Risks

  Capital investments reportedly earned annual rate of return

According to The New York Times, “During the fourteen years [Mitt Romney] ran it, Bain Capital’s investments reportedly earned an annual rate of return of over 100 percent, potentially turning an initial investment of $1 million into more than $14 mi..

  What will your monthly payments be

Your firm has taken out a $514,000 loan with 8.4% apr (compounded monthly) for some commercial property. as is common in commercial real estate the loan is a 5 year loan based on 15 year amortization. What will your monthly payments be?

  An investor owns some stock in general refrigeration

An investor owns some stock in General Refrigeration & Cooling. The stock recently underwent a 5-for-2 stock split. If the stock was trading at $50 per share just before the split, how much is each share most likely selling for after the split? If th..

  Management contract with its newly hired president

The Great Giant Corp. has a management contract with its newly hired president. The contract requires a lump sum payment of $25,100,000 be paid to the president upon the completion of her first 7 years of service. The company wants to set aside an eq..

  Discussing bonds and interest rates

We will spend another week discussing bonds and interest rates. What is the relationship between interest rate level and bond price?

  Determine the amount of reduced paid-up insurance

What would be the total fire insurance premium for Best Seconds if their $837,500 building belongs in structural classification D? The contents are worth $421,300 and they received an area rating of 2. At age 29, Wendi purchased a 20-year endowment i..

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