What is the required rate of return on stock with beta

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Reference no: EM132011639

1) Assume that the risk-free rate is 6.5% and the required return on the market is 8%. What is the required rate of return on a stock with a beta of 1.8? Round your answer to two decimal places.

2) You have been managing a $5 million portfolio that has a beta of 0.85 and a required rate of return of 10%. The current risk-free rate is 6.00%. Assume that you receive another $500,000. If you invest the money in a stock with a beta of 1.45, what will be the required return on your $5.5 million portfolio? Do not round intermediate calculations. Round your answer to two decimal places.

3) Holtzman Clothiers's stock currently sells for $19 a share. It just paid a dividend of $1.5 a share (i.e., D0 = $1.5). The dividend is expected to grow at a constant rate of 9% a year.

What stock price is expected 1 year from now? Round your answer to two decimal places.

What is the required rate of return? Round your answer to two decimal places. Do not round your intermediate calculations.

Please show all work and explain the answers

Reference no: EM132011639

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