Beta and required rate of returna stock has a required, Ask an Expert

Finance

Beta and required rate of return

A stock has a required return of 13%; the risk-free rate is 5%; and the market risk premium is 4%.

What is the stock's beta? Round your answer to two decimal places. ____?

If the market risk premium increased to 9%, what would happen to the stock's required rate of return? Assume that the risk-free rate and the beta remain unchanged.

a. If the stock's beta is equal to 1.0, then the change in required rate of return will be less than the change in the market risk premium.

b. If the stock's beta is greater than 1.0, then the change in required rate of return will be greater than the change in the market risk premium.

c. If the stock's beta is less than 1.0, then the change in required rate of return will be greater than the change in the market risk premium.

d. If the stock's beta is greater than 1.0, then the change in required rate of return will be less than the change in the market risk premium.

e. If the stock's beta is equal to 1.0, then the change in required rate of return will be greater than the change in the market risk premium.

New stock's required rate of return will be ____%. Round your answer to two decimal places.

View complete question

Financial Management, Finance

Category:- Financial Management
Reference No.:- M92321052

Have any Question?Write your Review or question?

Related Questions in Financial Management

We have seen that there are 3 phases discussion making and

We have seen that there are 3 phases (Discussion; Making and accepting proposals; and closing the deal), in the process. Please respond in about 300 words. Do we need to follow them in sequence, or can we be flexible bet ...

Use the internet to locate information regarding a

Use the Internet to locate information regarding a negotiation from the past 6 months that you would consider to be integrative in nature. Examine the differences between distributive and integrative negotiation. Determi ...

Answer the following question q1 what is economics and why

Answer the following Question : Q.1. What Is Economics, and Why Is It Important? Q.2. How Economists Use Theories and Models to Understand Economic Issues.

Case project managementnote use excel spreadsheetto carry

Case: Project Management NOTE : Use Excel Spreadsheet to carry on this project. Only ONE file is needed for the project. You can use several sheets within the same file. (ODD GROUPS) Dream Team Productions, a firm hired ...

This assignment investigates the financial needs of your

This assignment investigates the financial needs of your business venture from Assignment. Write a three to four (3-4) page paper in which you: Outline the financial start-up needs for this business. Consider such items ...

Module 2 - slpstock and bond valuationfor your second slp

Module 2 - SLP STOCK AND BOND VALUATION For your second SLP assignment, continue to do research on the company you chose to write about for your Module 1 SLP. This time you will be doing research about the valuation of t ...

In a minimum of two pages not counting the title and

In a minimum of two pages (not counting the title and reference pages), address how you would respond to the following points: Do you believe Carl is aware that he is a follower as well as the first shift supervisor? If ...

Read through the below post and provide any on of the

Read through the below post and provide any on of the following: APA format 250 Words. . Ask a probing question, substantiated with additional background information, evidence or research. · Share an insight from having ...

Discussion forumby thursday of this week search current

Discussion Forum By Thursday of this week, search current news (less than 6 months old) and find an article about a company reporting key financial news (e.g., landing a large contract, reporting unusual profits or losse ...

Please post the answer directly i will buyben wants to

Please post the answer Directly. I will buy. Ben wants to design a risky portfolio from two funds, Momentum Fund and Value Fund. Momentum Fund has an expected return of 35% and a standard deviation of return of 40%. Valu ...

4,153,160 Questions Asked
13,132 Experts
2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Recent Questions

Ask Financial Management Expert