What is the risk premium on the market

Assignment Help Finance Basics
Reference no: EM132525402

The Treasury bill rate is 7%, and the expected return on the market portfolio is 13%. According to the capital asset pricing model:

a. What is the risk premium on the market?

b. What is the required return on an investment with a beta of 1.8? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.)

c. If an investment with a beta of 0.5 offers an expected return of 9.4%, does it have a positive or negative NPV?

d. If the market expects a return of 11.2% from stock X, what is its beta? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Reference no: EM132525402

Questions Cloud

Prepare general journal entry to record the four transaction : Prepare general journal entries to record the four transactions above and to adjust the Allowance for Doubtful Debts account. Doubtful debts
What is the effective annual interest rate : What is the effective annual interest rate (EAR) you would get for your investment in the first 10 years?
Firm weighted average cost of capital-phillips equipment : The corporate tax rate is 38 percent. What is the firm's weighted average cost of capital?
Determine amount the company recorded for Cost of Goods sold : A company shows the following data in their accounting records for 2014. Determine the amount the company recorded for Cost of Goods Sold in 2014
What is the risk premium on the market : The Treasury bill rate is 7%, and the expected return on the market portfolio is 13%. According to the capital asset pricing model:
Identify what risks are involved in share investments : Imagine that, in addition to your Kiwisaver funds, you've managed to accumulate $20,000 which you want to invest now for your retirement in 35-years' time.
Make the journal entry to record the employer share : Make the journal entry to record the employer's share of the payroll amounts. Canada Pension Plan (CPP) from its company Employees
What is the expected 12-month interest rate in three years : If a pure discount three-year bond sells for $782 and a pure discount four-year bond sells for $733, what is the expected 12-month interest rate in three years
Determine base year ending inventory at cost : Millie & Sons adopted Dollar-Value Retail LIFO on December 31, 2013, when inventory's retail value was $125,000, Determine base year ending inventory at cost

Reviews

Write a Review

Finance Basics Questions & Answers

  What is the delta for this caplet

For the single-period evolution in the preceding figure, consider a caplet with maturity time 1 with strike rate k = 0.03.

  What would the risk-free rate

Stock Y has a beta of 1.2 and an expected return of 15.3 percent. Stock Z has a beta of .8 and an expected return of 10.7 percent.What would the risk-free rate have to be for the two stocks to be correctly priced?

  What is maximum price per share that dunbar should offer

Dunbar LTC, a national nursing home chain is considering purchasing a smaller chain, Eastern Nursing Homes. Dunbar's analysts project that the merger will result in free cash flows to equity holders with a present value of $72.52 million and they ..

  What is the projected dividend for the coming year

The required return on this stock is 10 percent, and the stock currently sells for $79 per share. What is the projected dividend for the coming year?

  Determine the bulk modulus of elasticity

The bulk modulus of elasticity for water is 2.205 GPa. Determine the change in pressure required to reduce a given volume by 0.75%.

  What is percy cost of common equity

Percy's CFO estimates that the company's WACC is 13.40%. What is Percy's cost of common equity? Round your answer to two decimal places.

  Create a common-size income statement

On the page that appears, click on the link for the Income Statement and copy the data to a new worksheet. Reformat the data so that it is more readable, and insert formulas in place of the numbers where possible.

  Parent point of view

Is the proposed project, as given, worthwhile from the project point of view? Is the proposed project, as given, worthwhile from the parent's point of view?

  Who are the three primary stakeholders in the proposal

Who are the three primary stakeholders in this proposal, and what do you predict their positions will be relative to this proposal?

  What was the credit card effective interest rate last year

A credit card had an APR of 15.21% all of last year and compounded interest daily. What was the credit card's effective interest rate last year?

  Financial information about companies

1. Where do analysts get financial information about companies? What are their concerns about the information? 2. Financial analysts are generally optimists who believe what they're told. Right or wrong? Explain.

  What is the project annual modified internal rate of return

A company's weighted average cost of capital is 10.1% per year. A project requires an investment of $1,200 today and it is expected to generate after-tax cash

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