What would risk-free rate-two stocks to be correctly priced

Assignment Help Financial Management

Reference no: EM13946932

Stock Y has a beta of 1.0 and an expected return of 13.5 percent. Stock Z has a beta of .6 and an expected return of 9 percent. What would the risk-free rate have to be for the two stocks to be correctly priced?

Reference no: EM13946932

Questions Cloud

Source of cash for a non-tax-paying firm : Which one of the following is a source of cash for a non-tax-paying firm?

What is after tax rates of return on all three securities : A corporation has $20,000 that it plans to invest in marketable securities. Choices include corporate bonds that yield 8%, municipal bonds that yield 6.2% and preferred stock that yields 7.4%. The corporations corporate tax rate is 30%. What is the a..

How much should you invest in the risk-free asset : You want your portfolio beta to be 0.90. Currently, your portfolio consists of $4,000 invested in stock A with a beta of 1.47 and $3,000 in stock B with a beta of 0.54. You have another $9,000 to invest and want to divide it between an asset with a b..

Consider the prevailing conditions : Consider the prevailing conditions that could affect the demand for stocks, including inflation, the economy, the budget deficit, national debt, and the Fed’s monetary policy, political conditions, and the general mood of investors. Based on these pr..

What would risk-free rate-two stocks to be correctly priced : Stock Y has a beta of 1.0 and an expected return of 13.5 percent. Stock Z has a beta of .6 and an expected return of 9 percent. What would the risk-free rate have to be for the two stocks to be correctly priced?

Car payment is interest expense : You borrow $78,000 to purchase a new car. The dealership offers you a 7% APR for 5 years. how much of your first car payment is interest expense? Explain how you found your answer.

Results of a financial planning model indicate : A firm's goal is to maintain a 75% debt-equity ratio. How much equity would be required if the results of a financial planning model indicate that the firm's assets will grow to $4 million?

Geometric average return for the period : A stock has annual returns of 5.4 percent, 12.9 percent, -3.8 percent, and 9.4 percent for the past four years. The arithmetic average of these returns is _____ percent while the geometric average return for the period is _____ percent.

What would her percentage return be in load fund return case : Alex invested $9,530 in a mutual fund at a time when the price per share was $10. The fund has a load fee of $50. How many shares did she purchase? Alex later sells her shares in the mutual fund for $12 per share. What would her percentage return be ..

User Account

All Pages