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The common stock of Jensen Shipping has an expected return of 17.10 percent. The return on...

The common stock of Jensen Shipping has an expected return of 17.10 percent. The return on the market is 12 percent and the risk-free rate of return is 4.5. What is the beta of this stock?

options: 1.26 1.68 0.75 1.41 1.52

A stock has an expected return of 12 percent, the risk-free rate is 5.4 percent, and the market risk premium is 5 percent. The beta of this stock must be

options: 2.78 1.10 1.48 1.32 3.44

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Answer #1

a.Expected return=risk free rate+beta*(market rate-risk free rate)

17.1=4.5+Beta*(12-4.5)

Beta=(17.1-4.5)/(12-4.5)

=1.68

b.Expected rate=risk free rate+Beta*market risk premium

12=5.4+(5*Beta)

Beta=(12-5.4)/5

=1.32

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