1 stock a has an expected return of 145 percent and a beta, Ask an Expert

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1. Stock A has an expected return of 14.5 percent and a beta of 0.9. Stock B has an expected return of 7 percent and a beta of 0.2. Both stocks have the same reward-to-risk ratio. What is the risk-free rate? That is, what would the risk-free rate have to be for the two stocks to be correctly priced?

2. The risk-free rate is 4.85%, the market risk premium is 8.41%, and the stock’s beta is 0.4. What is the cost of common stock (Ke)?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92821881

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