Reference no: EM13722916
Beta and required rate of return
A stock has a required return of 11%; the risk-free rate is 2.5%; and the market risk premium is 4%.
What is the stock's beta? Round your answer to two decimal places.
If the market risk premium increased to 8%, what would happen to the stock's required rate of return? Assume the risk-free rate and the betas remain unchanged.
A. If the stock's beta is equal to 1.0, then the change in required rate of return will be greater than the change in the market risk premium.
B. If the stock's beta is equal to 1.0, then the change in required rate of return will be less than the change in the market risk premium.
C. If the stock's beta is greater than 1.0, then the change in required rate of return will be greater than the change in the market risk premium.
D. If the stock's beta is less than 1.0, then the change in required rate of return will be greater than the change in the market risk premium.
E. If the stock's beta is greater than 1.0, then the change in required rate of return will be less than the change in the market risk premium.
New stock's required rate of return will be (_____)%. Round your answer to two decimal places.
|
Identify three major aspects of industrialization
: Identify three major aspects of industrialization between 1865 and 1920 that influenced U.S. society, economy, and politics. Consider issues such as geography, entrepreneurship, legislative representation, etc.
|
|
Conditions in india that make broad-based diversification
: Discuss the conditions in India that might make such a broad-based diversification both feasible and profitable?
|
|
Arbitrage strategy that yields a risk-less profit
: Suppose the forward rate satisfies f(0, T1, T2) > [B(0,T1) / B(0,T2)] - 1. Write down, showing all details, an arbitrage strategy that yields a risk-less profit of (1 + f(0, T1, T2)) - B(0,T1) / B(0,T2) dollars.
|
|
Assessing the various roles of managers
: Prepare a 700-1,050-word paper assessing the various roles of managers and individuals in the change process.
|
|
Beta and required rate of return
: A stock has a required return of 11%; the risk-free rate is 2.5%; and the market risk premium is 4%. What is the stock's beta? Round your answer to two decimal places. If the market risk premium increased to 8%, what would happen to the stock's requi..
|
|
What was gross foreign investment in this nation
: Last year, $100 million in outstanding bank loans to a developing nation’s government were not renewed, and the developing nation’s government paid off $50 million in maturing government bonds that had been held by foreign residents.
|
|
What is the monthly mortgage payment
: Suppose you are buying your first house for $400,000 with 20% down payment. You have arranged to finance the remaining amount with a 30-year, monthly payment, amortized mortgage at nominal annual rate of 3.6%. What is the monthly mortgage payment?
|
|
Ethical implications of cultural abuse of leader
: Explain the ethical implications of cultural abuse of leader/manager power. Your response should not simply state whether cultural abuse of power is ethical or unethical but also include the underlying theoretical premise that justifies your posit..
|
|
What are annual after-tax cash flows for wheel deal project
: The Wheel Deal Inc., a company that produces scooters and other wheeled non-motorized recreational equipment is considering an expansion of their product line to Europe. What are the annual after-tax cash flows for the Wheel Deal project?
|