User Account

All Pages

Risk-free rate to find the required return on the stock

Assignment Help Finance Basics
Reference no: EM131777685

A stock has a beta of 1.7. The pure rate of interest is 3.25 percent and investors require a 3 percent inflation premium. What is the required rate of return on this stock if the market risk premium is 6 percent? First, calculate the risk-free rate using the pure rate and the inflation premium. Next, use this risk-free rate to find the required return on the stock

16.5%

13.7%

12.9%

17.4%

14.8%

15.7%

Reference no: EM131777685

Questions Cloud

Results in a total financial market meltdown : Explain why derivatives such as CDOs and CDSs had such a destructive power that results in a total financial market meltdown, not only in the United States
Choose one of the themes in the list below and explain : Choose one of the themes in the list below. Do not try to combine them. To be effective, the theme must apply to both of the texts you chose .
What is the maximum profit for the producer : A producer in a perfectly competitive industry has a cost function described by TC(q) = 16,000 + 6q + 0.1q2. If the market price is 90 and it has already.
Define terms personal selling-motivation-sales skill levels : Define the terms personal selling, motivation, sales skill levels and direct marketing.
Risk-free rate to find the required return on the stock : First, calculate the risk-free rate using the pure rate and the inflation premium. Next, use this risk-free rate to find the required return on the stock
What is a hexadecimal number : What tag, new in HTML5, places video directly into your web page so visitors can watch video - To set the background for a page to white, use this code
Strategies and planning services relate to operational plans : Explain how human resource strategies and planning services relate to operational plans, particularly in relation to labour requirements.
Derive the short-run cost function of the firm : The production function of a typical food manufacturer has been estimated to be q = K(1/3) L(1/2) where K denotes capital and L denotes labor.
Team managers need to monitor and reward the team progress : Team managers need to monitor and reward the team’s progress. How can the manager of a virtual team best do this?

Reviews

Write a Review

Finance Basics Questions & Answers

  Computation of current yield and ytm and bond price

Computation of current yield and YTM and bond price and assume that the yield to maturity remains constant for the next 3 years

  What is a mutual fund

What is a mutual fund? What types of fees do I pay when I purchase/hold one? Find me a mutual fund to invest in (provide the ticker symbol and fund name) that has a beta close to 1.0

  What is the wacc for the last dollar raised to complete

The CFO estimates that a proposed expansion would require an investment of $6.8 million. What is the WACC for the last dollar raised to complete the expansion?

  Aunt tillie has agreed to loan you 10000 for the down

aunt tillie has agreed to loan you 10000 for the down payment on a home. you have decided to structure the loan so that

  Discuss the type of interest rate risk each fi faces

They are financed by $200 million of CDs with a variable rate of T-bill plus 3 percent. Discuss the type of interest rate risk each FI faces.

  Describe the change from the current and prior years

Briefly describe the change from the current and prior years in each of these key areas and determine if the changes would be positive or negative from an investor / stockholder's view.

  Discuss some of the pros and cons of counter trade

Discuss some of the pros and cons of counter trade from the country's perspective and the firm's perspective.

  Which alternative should r.morin select

Alternative B-The equipment dealer has agreed to finance the equipment with a 1-year loan. The $100,000 loan would require payment of principal and interest totaling $116,300.

  Important issue in maintaining managed care

"Maintenance of the professional relationship with physicians in the network recently has assumed a far greater role in in the industry's history."

  What is the cash conversion cycle

W&C normally turns over inventory 25 times per year, account receivable are turned over 8 per year, and the accounts payable turnover is 40. What is the cash conversion cycle?

  Amount of permanent and seasonal funds

1. Prepare a schedule showing the amount of permanent and seasonal funds requirement each month. 2. What is the average amount of long-term and short-term financing that will be required each month?

  Create an estimate of your future annual earnings

Create an estimate of your future annual earnings in a spreadsheet, reporting the following assumptions your actual current retirement savings and average annual salary growth rate.

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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