What is the current risk-free rate

Assignment Help Financial Management

Reference no: EM131015999

Polly Khan is trying to calculate the risk-free rate given the following information: The current market rate of interest is 8%. Investor’s have been requiring a 10% annual return on Builtrite’s stock which has a beta of 1.5. What is the current risk-free rate?

A) 4%

B) 5%

C) 3%

D) 2%

Reference no: EM131015999

Questions Cloud

After taxes to produce the numerator in coverage ratio : Which of the following is NOT added back to Net Profits After Taxes to produce the numerator in Coverage Ratio?

What is the annual percentage rate on your account : You are paying an effective annual rate of 13.74 percent on your credit card. The interest is compounded monthly. What is the annual percentage rate on your account? (Enter rate in percents, not in decimals.)

Individual or component costs of capital : Individual or component costs of capital) compute the cost of capital for the firm for the following: A bond that has a $1,000 par value (Face value) and a contract or coupon interest rate of 10.3 percent. Interest payments are $51.50 and are paid se..

Tuition financing plan-date of original enrollment : Wayne State offers a tuition financing plan where a $40,000 loan taken at the beginning of the freshman year would pay for all 4 years of college tuition. The plan calls for the loan to be repaid over a ten year period starting 5 years from the date ..

What is the current risk-free rate : Polly Khan is trying to calculate the risk-free rate given the following information: The current market rate of interest is 8%. Investor’s have been requiring a 10% annual return on Builtrite’s stock which has a beta of 1.5. What is the current risk..

What is dollar allocation to patient services department : What is the dollar allocation to each patient services department if patient services revenue is used as the cost driver? What is the dollar allocation to each patient services department if hours of housekeeping support are used as the cost driver? ..

Briefly discuss conceptual merits of using market rate : On January 1, 2015, RA Company issued for $537,616 its 20-year, 13% bonds that have a maturity value of $500,000 and pay interest semiannually on January 1 and July 1. Briefly discuss the conceptual merits of using the market rate as opposed to the c..

What are these payments worth to you right now : Your parents promise to give you $83 a month for 4 years, starting at the end of this month, to help you out. At a 8.15 percent APR discount rate, what are these payments worth to you right now?

Maximization different from stock price maximization : How is profit maximization different from stock price maximization? Under what conditions might profit maximization not lead to stock price maximization?

User Account

All Pages