Expected return on the market

Assignment Help Financial Management
Reference no: EM13944621

A stock has an expected return of 12.6 percent, its beta is 1.30, and the risk-free rate is 2.5 percent. What must the expected return on the market be? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)

Reference no: EM13944621

Questions Cloud

What is cost of common equity : Percy Motors has a target capital structure of 30% debt and 70% common equity, with no preferred stock. The yield to maturity on the company's outstanding bonds is 8%, and its tax rate is 40%. Percy's CFO estimates that the company's WACC is 15.00%. ..
Distribution of total body protein in adult men : The distribution of total body protein in adult men with liver cirrhosis is approximately Normal with mean 9.8 kg and standard deviation 0.1 kg. Reference: Ref 11-5 What is, approximately, the probability that a randomly selected man with liver ci..
What should the share price be in one year : A share of stock sells for $44 today. The beta of the stock is 1.6, and the expected return on the market is 12 percent. The stock is expected to pay a dividend of $.70 in one year. If the risk-free rate is 4.3 percent, what should the share price be..
What is the beta of your portfolio : You own 500 shares of Stock A at a price of $60 per share, 405 shares of Stock B at $80 per share, and 500 shares of Stock C at $41 per share. The betas for the stocks are .8, 1.8, and .7, respectively. What is the beta of your portfolio?
Expected return on the market : A stock has an expected return of 12.6 percent, its beta is 1.30, and the risk-free rate is 2.5 percent. What must the expected return on the market be?
Prototyping part of a database systems application : The assignment comprises designing and prototyping part of a database systems application. Students should form themselves into groups of up to 4 members and pass details of the members of their group to the course leader.
Is di in compliance with its bond covenants : Dallas Instruments has a large bond issue whose covenants require: (1) that DI' s interest coverage ratio exceeds 4.0; (2) that DI' s ratio of tangible assets to long-term debt exceeds 1.50; Is DI in compliance with its bond covenants
Read the following mini security policy. : Each document should have a footer or header identifying the level of sensitivity. Suggested sensitivity levels are unrestricted and client sensitive.
Case nintendo-fighting the video game console wares : In groups of 2 people, analyze the case Nintendo: Fighting the Video Game Console Wares (p. 618) using the case analysis process below. Provide a strategic recommendation.

Reviews

Write a Review

Financial Management Questions & Answers

  What factor did pepsico likely consider in deriving its rate

What factors did PepsiCo likely consider in deriving its required rate of return on the project in Brazil? Describe the uncertainty that surrounds the estimate of future cash flows from the perspective of the US parent.

  Explain why lenders offer subprime loans

Subprime loans have higher loss rates than many other types of loans. Explain why lenders offer subprime loans. Describe the characteristics of the typical borrower in a subprime consumer loan.

  Maximize share value and minimize shareholder costs

In each of the theories of capital structure the cost of equity rises as the amount of debt increases. So why don't financial managers use as little debt as possible to keep the cost of equity down? After all, isn't the goal of the firm to maximize s..

  Valuation-what is the current price of stock

Harrison Corporation is interested in acquiring Van Buren Corporation. Assume that the risk-free rate of interest is 6% and the market risk premium is 4%. Van Buren's dividend is expected to grow at a constant rate of 6% a year, and its beta is 0.8. ..

  Create a budget for the set design and construction project

Create a budget for the set design and construction project and why don't you need to take into account fringe benefit costs for the workers?

  What factors led to the near death of sifibank

What factors led to the near death of SifiBank after the financial crisis of 2008-2009? What is the Volcker Rule and what impact does it have on banking and financial risk management?

  Severe abdominal pain and placed in an intensive care unit

Janine was hospitalized with severe abdominal pain and placed in an intensive care unit. Her doctor told the hospital personnel to order around-the-clock nursing care for Janine.  In view of the fact that no express contract was ever formed, can Nurs..

  The largest percentage increase in price

Assume that all interest rates in the economy decline from 10% to 9%. Which of the following bonds would have the largest percentage increase in price?

  How much is coefficient of variation for the new portfolio

An investor holds a porfolio of stocks and is consider in investing in the DBB Company. The firm's prospects look neutral and you estimate the following probability distribution of possible returns. How much is the coefficient of variation for the ne..

  What is the standard deviation of your portfolio

Suppose you invest $4,500 in Stock A and $5,500 in Stock B. The variance of Stock A is 10%, the variance of Stock B is 20%, and the covariance between the two stocks is 1.87%. What is the standard deviation of your portfolio (in percent)?

  Expected return on the risk free asset

What is the Beta for XYZ Company, given the following information: (a) Expected Return on Company XYZ’s Stock: 7.8%, (b) Expected Return on the Risk Free Asset: 1%, and (c) Expected Rate of Return on the Market: 8.9%.

  Present value-multiple payments-annual discounting

I want to have $1,000,000 at the end of 1 year, $1,000,000 at the end of 2 years, and $1,000,000 at the end of 3 years. If the interest rate is 5.2%, I need to invest $  now to achieve these payouts.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd