Computing rate of return-capm

Assignment Help Finance Basics

Reference no: EM1333170

1. Required rate of return: Stock R has a beta of 1.5, Stock S has a beta of 0.75, the expected rate of return on an average stock is 13 percent, and the risk-free rate of return is 7 percent. By how much does the required return on the riskier stock exceed the required return on the less risky stock?

2. CAPM and required return: Calculate the required rate of return for Manning Enterprises, assuming that investors expect a 3.5 percent rate of inflation in the future. The real risk-free rate is 2.5 percent and the market risk premium is 6.5 percent. Manning has a beta of 1.7, and its realized rate of return averaged 13.5 percent over the past 5 years.

Reference no: EM1333170

Questions Cloud

Incremental cost of buying the containers : Should Curtis make or buy the containers? What is the incremental cost (benefit) of buying the containers as opposed to making them?

The primary period had been compound growth rate : The primary period had been 10 years, what would the compound growth rate have been then. What would you expect the sales to be after 16 more years.

Personal relationship with the employees : We have learned that employees want to feel valued and valuable and We have also learned that salary and benefits can only go so far. Each manager needs to have a personal relationship with the employees.

Suppose that x is a vector that allready exists : Which is the right matlab logical expression to check whether the value of x is between -10 and 10 (inclusive).

Computing rate of return-capm : CAPM and required return: Calculate the required rate of return for Manning Enterprises, assuming that investors expect a 3.5 percent rate of inflation in the future.

Research in operation management about general electric : Research in operation management about General Electric Company and discuss about history of the company and operation/process design.

Explain sources needed for literature study : Explain Sources needed for literature study and Any information might be complimentary to the little bit

Illustrate what is the current expected price of the stock : Illustrate what is the current expected price of the stock. What is the expected price of the stock at Year 6.

Small jobs less profitable than they were in past : Assume that the price charged for small jobs does not change in the current year. Are small jobs less profitable than they were in the past?

User Account

All Pages