Given a risk-free rate of return of 3.5 percent, a beta of 1.2, and a return...

Question

Question

Given a risk-free rate of return of 3.5 percent, a beta of 1.2, and a return...

Given a risk-free rate of return of 3.5 percent, a beta of 1.2, and a return on the market portfolio of 14 percent, what is the required rate of return using the CAPM?

a. 14.8%

b. 18.2%

c. 16.1%

d. 13.4%

business finance

Add a comment Improve this question Transcribed image text

Answer 1

Answer #1

Required return=risk free rate+beta*(market rate-risk free rate)

=3.5+1.2*(14-3.5)

which is equal to

=16.1%

Add a comment

Answer 2

Similar Homework Help Questions

Asset Y has a beta of 1.2. The risk-free rate of return is 6 percent, while...

Asset Y has a beta of 1.2. The risk-free rate of return is 6 percent, while the return on the market portfolio of assets is 12 percent. The asset's market risk premium is Asset Y has a beta of 1.2. The risk-free rate of return is 6 percent, while the return on the market portfolio of assets is 12 percent. The asset's market risk premium is
(CAPM) The risk free rate of return is 3% and the stock's beta coefficient is 1.2....

(CAPM) The risk free rate of return is 3% and the stock's beta coefficient is 1.2. If the market risk premium is 8.2%.,what is the required return of stock?
The risk-free rate is 2.5 percent and the market risk premium is 5 percent. Assume that...

The risk-free rate is 2.5 percent and the market risk premium is 5 percent. Assume that required returns are based on the CAPM. Your $1 million portfolio consists of $ 208 ,000 invested in a stock that has a beta of 1.0 and the remainder invested in a stock that has a beta of 1.2 . What is the required return on this portfolio?

Asset P has a beta of 0.9. The risk-free rate of return is 8 percent, while...

Asset P has a beta of 0.9. The risk-free rate of return is 8 percent, while the return on the market portfolio of assets is 14 percent. The asset's required rate of return is
13. A stock has a beta of 1.2 and an expected return of 17 percent. A...

13. A stock has a beta of 1.2 and an expected return of 17 percent. A T-bill earns a rate of 5.1 percent. The beta of a portfolio comprised of these two assets is 0.85. What percentage of the portfolio is invested in the stoc? (1 point) Hint: T-bill eams risk free rate A. 71% B. 77% C.84% D. 89% E. 92% 14. You own a portfolio equally invested in a risk-free asset and two stocks. One of the stocks...
4. A stock has a beta of 2.2, the risk-free rate is 6 percent, and the...

4. A stock has a beta of 2.2, the risk-free rate is 6 percent, and the expected return on the market is 12 percent. Using the CAPM, what would you expect the required rate of return on this stock to be? What is the market risk premium?

What is the CAPM required return of a stock with a beta of 1.2 if the...

What is the CAPM required return of a stock with a beta of 1.2 if the risk-free rate is 1.9% and the expected market risk premium is 5.5%? Answer in percent, rounded to two decimal places. (e.g., 4.32% = 4.32). [Hint: CAPM required return = Risk-free rate + beta x EMRP. Remember order of operations. Multiply beta and EMRP first, then add the risk-free rate]
A&Z Corporation's stock has a beta of 1.2. The risk-free rate is 5% and the expected...

A&Z Corporation's stock has a beta of 1.2. The risk-free rate is 5% and the expected return on the market is 13%. What is the required rate of return on A&Z Corporation's stock using the Capital Asset Pricing Model (CAPM)? Show calculations, please
TPE Corp. has a beta of 1.4. The risk-free interest rate is 3.5 percent and the...

TPE Corp. has a beta of 1.4. The risk-free interest rate is 3.5 percent and the expected market risk premium is 6.5 percent. What is the required rate of return on TPE's stock? 9.1 percent 12.6 percent 11.4 percent 7.7 percent 10.0 percent

ii. Currently, the risk-free rate, krp, is 5 percent and the required return on the market,...

ii. Currently, the risk-free rate, krp, is 5 percent and the required return on the market, km, is 11 percent. Your portfolio has a required rate of return of 9 percent. Your sister has a portfolio with a beta that is twice the beta of your portfolio. What is the required rate of return on your sister's portfolio? a. 12.0% b. 12.5% c. 13.0% d. 17.0% e. 18.0%

Given a risk-free rate of return of 3.5 percent, a beta of 1.2, and a return...

Homework Answers

Add Answer to:
Given a risk-free rate of return of 3.5 percent, a beta of 1.2, and a return...

Post as a guest

Earn Coins

Asset Y has a beta of 1.2. The risk-free rate of return is 6 percent, while...

(CAPM) The risk free rate of return is 3% and the stock's beta coefficient is 1.2....

The risk-free rate is 2.5 percent and the market risk premium is 5 percent. Assume that...

Asset P has a beta of 0.9. The risk-free rate of return is 8 percent, while...

13. A stock has a beta of 1.2 and an expected return of 17 percent. A...

4. A stock has a beta of 2.2, the risk-free rate is 6 percent, and the...

What is the CAPM required return of a stock with a beta of 1.2 if the...

A&Z Corporation's stock has a beta of 1.2. The risk-free rate is 5% and the expected...

TPE Corp. has a beta of 1.4. The risk-free interest rate is 3.5 percent and the...

ii. Currently, the risk-free rate, krp, is 5 percent and the required return on the market,...

Given a risk-free rate of return of 3.5 percent, a beta of 1.2, and a return...

Homework Answers

Add Answer to: Given a risk-free rate of return of 3.5 percent, a beta of 1.2, and a return...

Post as a guest

Earn Coins

Add Answer to:
Given a risk-free rate of return of 3.5 percent, a beta of 1.2, and a return...