P9-9: Cost of common stock: CAPM J&M Corporation has a beta,b,of 1.2. The risk-Free Rate is...

Question

Question

P9-9: Cost of common stock: CAPM J&M Corporation has a beta,b,of 1.2. The risk-Free Rate is 6%, and the market return is 11%.

A. Determine the risk premium on J&M common stock.

B. Determine the required return that J&M common stock should provide.

C. Determine J&M's cost of common stock equity using CAPM.

business finance

Answer 1

Answer #1

Risk premium market return - risk free rate- 5.00% [ 1196-696] 12.00% 0.06+(1.2*0.05) Required return- risk free rate + marke

Answer 2

Similar Homework Help Questions

Cost of common stock equity-CAPM J&M Corporation common stock has a beta, b, of 0.6. The...

Cost of common stock equity-CAPM J&M Corporation common stock has a beta, b, of 0.6. The risk-free rate is 4%, and the market return is 9% a. Determine the risk premium on J&M common stock. b. Determine the required return that J&M common stock should provide. c. Determine J&M's cost of common stock equity using the CAPM.
3 P9-9 (similar to) Cost of common stock equity-CAPM Netflix common stock has a beta, b,...

3 P9-9 (similar to) Cost of common stock equity-CAPM Netflix common stock has a beta, b, of 1.4. The risk-free rate is 5%, and the market return is 12%. 1. Determine the risk premium on Netflix common stock . Determine the required return that Netflix common stock should provide -. Determine Netflix's cost of common stock equity using the CAPM. 1. The risk premium on Netflix common stock is %. (Round to one decimal place)
Cost of common stock equity-CAPM Netflix common stock has a beta, b, of 1.6. The risk-free...

Cost of common stock equity-CAPM Netflix common stock has a beta, b, of 1.6. The risk-free rate is 5%, and the market return is 9%. a. Determine the risk premium on Netflix common stock. b. Determine the required return that Netflix common stock should provide. c. Determine Netflix's cost of common stock equity using the CAPM.

Cost of common stock equity-CAPM Netflix common stock has a beta, b, of 1.7. The risk-free...

Cost of common stock equity-CAPM Netflix common stock has a beta, b, of 1.7. The risk-free rate is 4%, and the market return is 9%. a. Determine the risk premium on Netflix common stock. b. Determine the required return that Netflix common stock should provide c. Determine Netflix's cost of common stock equity using the CAPM. a. The risk premium on Netflix common stock is %. (Round to one decimal place)
Cost of common stock equity-CAPM Netflix common stock has a beta, b, of 0.8. The risk-free...

Cost of common stock equity-CAPM Netflix common stock has a beta, b, of 0.8. The risk-free rate is 6%, and the market return is 14%. a. Determine the risk premium on Netflix common stock b. Determine the required return that Netflix common stock should provide c. Determine Netflix's cost of common stock equity using the CAPM. a. The risk premium on Netflix common stock is %. (Round to one decimal place) b. The required return that Netflix common stock should provide is % (Round to...
Netflix common stock has a beta, b, of 0.7. The risk-free rate is 6 %, and...

Netflix common stock has a beta, b, of 0.7. The risk-free rate is 6 %, and the market return is 13%. a. Determine the risk premium on Netflix common stock. b. Determine the required return that Netflix common stock should provide. c. Determine Netflix's cost of common stock equity using the CAPM

(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?
QUESTION 3 "Assume that Tesla common stock has a Beta of 1.2, the risk-free rate of...

QUESTION 3 "Assume that Tesla common stock has a Beta of 1.2, the risk-free rate of interest is 3% and the market risk premium is 5%. According to the CAPM, what should be Investors required rate of return for Tesla stock? 9.00% 9.20 % 5.40% 15.20 % 12.60% QUESTION 4 "You expect Caterpillar will pay dividends of 2.25 in one year, 2.50 in two years, and 2.75 in three years. From that point onwards, dividends will grow at 7% per...
Sheridan Industries common stock has a beta of 1.2. If the market risk-free rate is 5.2...

Sheridan Industries common stock has a beta of 1.2. If the market risk-free rate is 5.2 percent and the expected return on the market is 8.2 percent, what is Sheridan’s cost of common stock? I solved this problem incorrectly by doing Kes=Rrf+(Betaesx market risk premium) Kes=0.052+(1.2x0.082) Kes=0.052+0.098400 Kes=0.1504=15.0% I'm not sure what I am doing wrong. Please show full calculation. X Your answer is incorrect. Sheridan Industries common stock has a beta of 1.2. If the market risk-free rate is...

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]