2b. Apollo Industries is a successful company that has a beta of 0.75. The expected market...
2b. Apollo Industries is a successful company that has a beta of 0.75. The expected market rate of return is 8.65% and a 10 year US Treasury bond is currently trading at 2.75%. What is the CAPM for Apollo? (Show your work.)
2c. If the current cost of capital is 7.00%, the risk-free rate is 1.00%, and the CAPM for a stock is 7.60%, what is that company’s beta? (Show your work.)
2d. If the current risk-free rate is 2.00%, the beta is 1.2, and the market risk premium is 6.00, what is the CAPM? (Show your work.)
Homework Answers
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2b. Apollo Industries is a successful company
that has a beta of 0.75. The expected market...
The beta for Cowboy Industries, Inc. is 1.2. The expected return on the market portfolio is...
The beta for Cowboy Industries, Inc. is 1.2. The expected return on the market portfolio is 14.0% and the risk-free rate is 3.0%. If the CAPM/SML is correct, what is Cowboy Manufacturing’s required (expected) return? Group of answer choices 16.2% 13.8% None of these are correct. 12.9% 11.1%
(CAPM) A firm has a beta of 1.5. If expected market return is 5.5% and risk-free...
(CAPM) A firm has a beta of 1.5. If expected market return is 5.5% and risk-free rate is 2%, what is the cost of equity? Show formula and work by hand-only. Do not use excel.
The common stock of United Industries has a beta of 1.34 and an expected return of...
The common stock of United Industries has a beta of 1.34 and an expected return of 14.29 percent. The risk-free rate of return is 3.7 percent. a. What is the market risk premium? 7.90% b. What is the expected return on the market? 11.60% Please check the answers and show all work typed out. No excel or grid style please as I am on mobile.
Suppose Yachi Industries has a beta of 1.2. The expected return on a market portfolio is...
Suppose Yachi Industries has a beta of 1.2. The expected return on a market portfolio is 10%, and risk free rate is 4%. What is the expected return of Yachi? If you want to diversify your investment risk, so you decide to invest 40% of your money in Yachi, and rest of your money in a government bond (risk-free). If you know the standard deviation of Yachi is 10% what is your portfolio standard deviation.
1) A project has a market beta of 1.7. The risk-free rate is 3%, and the...
1) A project has a market beta of 1.7. The risk-free rate is 3%, and the equity premium is 5%. Your firm should undertake this project only if it returns greater or equal to 8% greater or equal to 35% greater or equal to 8.3333% greater or equal to 11.5% 2) A zero-coupon bond has a beta of 0.3 and promises to pay $1000 next year with a probability of 95%. If the bond defaults, it will pay nothing. One...
CAPM Required Return A company has a beta of .58. If the market return is expected...
CAPM Required Return A company has a beta of .58. If the market return is expected to be 12.8 percent and the risk-free rate is 5.40 percent, what is the company's required return?
CAPM and required return Beale Manufacturing Company has a beta of 2.5, and Foley Industries has...
CAPM and required return Beale Manufacturing Company has a beta of 2.5, and Foley Industries has a beta of 0.3. The required return on an index fund that holds the entire stock market is 9%. The risk-free rate of interest is 3.75%. By how much does Beale's required return exceed Foley's required return? Round your answer to two decimal places.
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...
CAPM Required Return A company has a beta of .68. If the market return is expected...
CAPM Required Return A company has a beta of .68. If the market return is expected to be 13.8 percent and the risk-free rate is 5.90 percent, what is the company's required return? Multiple Cholce 1717% 9.38% 15.28% 11.27%
CAPM Required Return A company has a beta of .63. If the market return is expected...
CAPM Required Return A company has a beta of .63. If the market return is expected to be 13.3 percent and the risk-free rate is 5.65 percent, what is the company's required return? A. 14.03% B. 10.47% C. 8.38% D. 16.12%
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...
CAPM Required Return A company has a beta of .68. If the market return is expected to be 13.8 percent and the risk-free rate is 5.90 percent, what is the company's required return? Multiple Cholce 1717% 9.38% 15.28% 11.27%
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