What must be beta of stock that investors expect to return

Assignment Help Financial Management
Reference no: EM13950110

If the expected rate of return on the market portfolio is 14% and T-bills yield 4%, what must be the beta of a stock that investors expect to return 12%? (Round your answer to 4 decimal places.)

Reference no: EM13950110

Questions Cloud

What is the bank cost of preferred stock : Sixth Fourth Bank has an issue of preferred stock with a $6.40 stated dividend that just sold for $126 per share. What is the bank’s cost of preferred stock?
What is the interest rate that the expectations theory : If the real interest rate in the economy is 3% and the expected inflation is 2% per year over a five year period, assuming the maturity risk premium is 0, what is the interest rate that the expectations theory would predict for a five year Treasury n..
Risk-free rate-expected rate of return on market portfolio : A project under consideration has an internal rate of return of 17% and a beta of 0.4. The risk-free rate is 7%, and the expected rate of return on the market portfolio is 17%. Calculate the required return. Calculate the required return if its beta ..
Completely free of political influence : Why is the Federal Reserve Bank considered to be relatively but not completely free of political influence in the United States?
What must be beta of stock that investors expect to return : If the expected rate of return on the market portfolio is 14% and T-bills yield 4%, what must be the beta of a stock that investors expect to return 12%?
Reason for bank panics prior to the establishment : Which of the following problems was a reason for bank panics prior to the establishment of the Federal Reserve bank:
Examples is an illustration of interest rate risk : Which of the following examples is an illustration of interest rate risk?
Benefits and costs of acting unethically in business : What might be some benefits and costs of acting unethically in business? Distinguish between benefits and harms to the individual and benefits and harms to the firm
Considering to add additional stock to three stock portfolio : Your sister is considering to add one additional stock to a three stock portfolio, to form a four stock portfolio. The three stocks currently held all have b=1.0, and they are perfectly positively correlated with the market.

Reviews

Write a Review

Financial Management Questions & Answers

  About the current share price

Great Pumpkin Farms just paid a dividend of $3.10 on its stock. The growth rate in dividends is expected to be a constant 6 percent per year indefinitely. Investors require a return of 13 percent for the first three years, a return of 11 percent for ..

  Different amounts of residual income imply about firm

Computing Residual Income. Suppose the following hypothetical data represent total assets, book value, and market value of common shareholders’ equity (dollar amounts in millions) for three firms. What do the different amounts of residual income impl..

  Considering investing in franchise-requires initial outlay

Kay SAdilla is considering investing in a franchise that requires an initial outlay of $75,000. She conducted market reserch and found that after-tax cash flows on the investment should be about $15,000 per year for the next 7 years. The franchiser s..

  Calculate the balance in the investments account

Barry, Hank, and Babe form a company named Long Ball Investments, hoping to find that elusive home run stock. A new clothing company by the name of Major League Apparel has caught their eye. Major League Apparel has two classes of stock authorized: C..

  Concerning advantages of charitable remainder annuity trust

Which of the following statements concerning the advantages of the charitable remainder annuity trust over the charitable remainder unitrust is (are) correct?

  Estimate the value of common stock

Sooty Iron Works, Inc. has had declining sales and increasing expenses over the last decade and expects this trend to continue. As a result, the company predicts that earnings and dividends will decline indefinitely at a rate of 4 percent per year. S..

  What about very large increases in its debt ratio

If the chosen firm attempts to grow faster than its sustainable growth rate with modest increases in its debt ratio, how will this likely affect its WACC? What about very large increases in its debt ratio? Explain.

  What is karls recognized gain

LO.8, 10 Karl purchased his residence on January 2, 2014, for $260,000, after having lived in it during 2013 as a tenant under a lease with an option to buy clause. On August 1, 2015, Karl sells the residence for $315,000. On June 13, 2015, Karl purc..

  Measure of the debt ratio upward or downward

Capital Structure. Here is a simplified balance sheet for Epicure Pizza (figures in $MM) Current assets 80 Fixed assets 125 Total 205 Current Liabilities 60 Long term debt 65 Equity 80 Total 205 Note: There are 16 million shares outstanding. Do you n..

  Assumption for future dividend growth rate

Our company is Target? First search the Yahoo finance and find the target data? Use dividend discount model to calculate the cost of equity Explain and conceptually justify your assumption for future dividend growth rate

  How much is the stock currently worth

Netscrape Communications does not currently pay a dividend. You expect the company to begin paying a $4.6 per share dividend in 8 years, and you expect dividends to grow perpetually at 6.1 percent per year thereafter. If the discount rate is 12 perce..

  What is the maximum number of new shares of common stock

Aspin Corporation’s charter authorizes issuance of 2,900,000 shares of common stock. Currently, 1,200,000 shares are outstanding, and 400,000 shares are being held as treasury stock. The firm wishes to raise $104,500,000 for a plant expansion.

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