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Suppose the S&P 500 Index has an average return of 11.2% with a standard deviation of...

Suppose the S&P 500 Index has an average return of 11.2% with a standard deviation of 23.7%, and the average return on Wells Fargo stock is 16.3% with a standard deviation of 42.3%. What is the beta for Wells Fargo is the correlation coefficient between Wells Fargo stock return and the S&P 500 Index return is 0.82?

A.

0.65
B.

1.04
C.

1.46
D.

0.82

The beta for Facebook is 1.54. Suppose that the yield on U.S. Treasury securities is 1.3%, and the expected return on the S&P 500 is 8.0%. What is the cost of equity (or required rate of return) for Facebook?

A.

19.03%
B.

10.32%
C.

6.35%
D.

11.62%

Suppose the expected return on the S&P 500 Index is 9.10% and the yield on U.S. Treasury securities is 1.52%. What is the market risk premium?

A.

13.83%
B.

10.62%
C.

7.58%
D.

5.99%
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