CCC Corp has a beta of 1.5 and is currently in equilibrium. The required rate of return on the stock is 12.30% versus a required return on an average stock of 10.00 %. Now the required return on an average stock increases by 30.0% (not percentage points). Neither betas nor the risk- free rate change. What would CCC's new required return be? Do not round your intermediate calculations. O a. 13.00% O b. 19.50% O c. 15.99% Od. 16.80% O e. 15.30%

CCC Corp has a beta of 1.5 and is currently in equilibrium. The required rate of return on the stock is 12.30% versus a required return on an average stock of 10.00 %. Now the required return on an average stock increases by 30.0% (not percentage points). Neither betas nor the risk- free rate change. What would CCC's new required return be? Do not round your intermediate calculations. O a. 13.00% O b. 19.50% O c. 15.99% Od. 16.80% O e. 15.30%

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Company A has a beta of 0.70, while Company B's beta is 0.95. The required return on the stock market is 11.00%, and the risk-free rate is 4.25%. What is the difference between A's and B's required rates of return? Select the correct answer. a. 1.61% b. 1.63% c. 1.65% d. 1.67% e. 1.69%
CCC Corp has a beta of 1.5 and is currently in equilibrium. The required rate of return on the stock is 12.00% versus a required return on an average stock of 10.00%. Now the required return on an average stock increases by 40.0% (not percentage points). Neither betas nor the risk-free rate change. What would CCC's new required return be? Do not round your intermediate calculations. Group of answer choices 20.70% 20.52% 13.50% 18.00% 20.34% No excel calculation, No images Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
AA Corporation's stock has a beta of 0.8. The risk-free rate is 2%, and the expected return on the market is 10%. What is the required rate of return on AA's stock? Do not round intermediate calculations. Round your answer to one decimal place.
FIN300 Inc's stock has an expected return of 12.25%, a beta of 1.25, and is in equilibrium. If the risk-free rate (R') is 5.00%, what is the market risk premium? (Hint: I am asking for Market Risk Premium term not Market Expected Return term. While Market Expected Return is denoted by Rm, Market Risk Premium is denoted as (Rm-R))
A company's stock has a beta of 1.20, the risk-free rate is 1.6%, and the market risk premium is 16%. What is the firm's required rate of return? Do not round your intermediate calculations.
Give typing answer with explanation and conclusion The return on the Tarheel Corporation stock is expected to be 14 percent with a standard deviation of 9 percent. The beta of Tarheel is 0.9. The risk-free rate is 6 percent, and the expected return on the market portfolio is 16 percent. What is the probability that an investor in Tarheel will earn a rate of return less than the required rate of return? Assume that returns are normally distributed. Use Table V to answer the question. Round z value in intermediate calculation to two decimal places. Round your answer to the nearest whole number.
Stock A has a beta of 1.30, and its required return is 11.35%. Stock B's beta is 0.80. If the risk-free rate is 2.90%, what is the required rate of return on B's stock? (Hint: First find the market risk premium.) Do not round your intermediate calculations. a. 8.10% b. 6.50% c. 7.56% d. 8.45% e. 8.77%
Don't provide handwritten solution. Suppose Company A's stock return has a volatility of 50% and its correlation with the Market Portfolio is 80%. The expected return on the Market Portfolio is 7%, the volatility of the Market Portfolio is 20%, and the riskfree interest rate is 1%. Calculate the expected rate of return on the stock of Company A. Type your answer below, in percentage terms rounded to the nearest whole percent (e.g., 8.05% would be written as 8)
Consider the following multifactor (APT) model of security returns for a particular stock. Factor Risk Premium 8% 9 7 Factor Inflation Industrial production Oil prices Factor Beta 1.1 0.6 0.3 a. If T-bills currently offer a 7% yield, find the expected rate of return on this stock if the market views the stock as fairly priced. (Do not round intermediate calculations. Round your answer to 1 decimal place.) X Answer is complete but not entirely correct. Expected rate of return 19.0 X %
Fisher Corp has a beta value of 0.5. If the risk free rate is 2.5% and the Market Risk Premium is 11.0%, what is the Expected/Required return on Fisher Corp's stock? Using the Capital Asset Pricing Model, calculate the expected / required rate of return. (Enter your answer as a percentage, not in decimal form. E.g. 15% should be entered as 15.00 and not as 0.15.)
The risk-free rate of return is 2 percent, and the expected return on the market is 6.7 percent. Stock A has a beta coefficient of 1.7, an earnings and dividend growth rate of 8 percent, and a current dividend of $3.40 a share. Do not round intermediate calculations. Round your answers to the nearest cent. What should be the market price of the stock? $ If the current market price of the stock is $208.00, what should you do? The stock be purchased. If the expected return on the market rises to 8.9 percent and the other variables remain constant, what will be the value of the stock? $ If the risk-free return rises to 3.5 percent and the return on the market rises to 9.4 percent, what will be the value of the stock? $ If the beta coefficient falls to 1.5 and the other variables remain constant, what will be the value of the stock? $ Explain why the stock’s value changes in c through e. The increase in the return on the market the…
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