What is the required return on the market

Assignment Help Financial Management

Reference no: EM13883216

Required Rate of Return

Assume that the risk-free rate is 4.5% and that the market risk premium is 8%.

What is the required rate of return on a stock with a beta of 0.8? Round your answer to two decimal places.

What is the required rate of return on a stock with a beta of 1.7? Round your answer to two decimal places.

What is the required return on the market? Round your answer to two decimal places.

Reference no: EM13883216

Questions Cloud

Established pattern of increasing its dividends : The common stock of Auto Deliveries sells for $26.96 a share. The stock is expected to pay $1.90 per share next year when the annual dividend is distributed. Auto Deliveries has established a pattern of increasing its dividends by 4.7 percent annuall..

Set of cash flows if the relevant discount rate : Consider the following cash flows: Year Cash Flow 0 −$31,000 1 17,300 2 15,200 3 10,600 Requirement 1: What is the profitability index for the above set of cash flows if the relevant discount rate is 10 percent?

Calculate your portfolios new beta : Your retirement fund consists of a $7,500 investment in each of 20 different common stocks. The portfolio's beta is 2.15. Now, suppose you sell one of the stocks with a beta of 1.0 for $7,500 and use the proceeds to buy another stock whose beta is 1...

Mortgage payments are treated as an ordinary annuity : You are planning to buy a house appraised for $350,000 and finance it through a mortgage of $250,000. You would then have a loan-to-value ratio of 0.714, safely below the cutoff by your lender of 0.80. What is the amount that you will pay per month i..

What is the required return on the market : Assume that the risk-free rate is 4.5% and that the market risk premium is 8%. What is the required rate of return on a stock with a beta of 0.8? What is the required return on the market?

Calculate the sustainable growth rate of the company : Johnson Products earned $3.10 per share last year and it paid out $.75 dividend. The company’s ROE is 16%. Calculate the dividend payout ratio; Calculate the sustainable growth rate of the company.

Differentiate between decreasing-charge depreciation methods : Summarize the authoritative guidance for asset impairments under IFRS. Give at least two (2) examples of events that could cause an asset to be tested for impairment, and recommend the best method to determine the fair value of an impaired asset. Dif..

What is the standard deviation of the analysts profit : Assume a market index represents the common factor and all stocks in the economy have a beta of 1. Firm-specific returns all have a standard deviation of 39%. Suppose an analyst studies 20 stocks and finds that one-half have an alpha of 3.3%, and one..

Depreciated straight-line to zero over their lives : Lang Industrial Systems Company (LISC) is trying to decide between two different conveyor belt systems. System A costs $244,000, has a four-year life, and requires $76,000 in pretax annual operating costs. System B costs $342,000, has a six-year life..

User Account

All Pages