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- A stock has an expected return of 10.2%, the risk-free rate is 4.1% and the market risk premium is 7.2%. Calculate the beta of this stock. e(r) = rf + β(rm - rf)b) Suppose that you observe the following information in Table 2 for stocks A and B: Table 2 Expected Return (%) 11% Stock Beta A 0.8 В 14% 1.5 The risk-free rate of return is 6% and the expected rate of return on the market index is 12%. Using the Single-Index Model, calculate the alpha of both stocks. Show your calculations. Explain what the alpha of the single-factor model represents and interpret your results.Give typing answer with explanation and conclusion the expected return on stock A is 11.35%. the expected return on stock B is 8.7%. assuming CAPM holds, if the beta of stock A is higher than the beta of stock B by 0.17, what should the risk premium be?
- How do you find the market risk premium and market expected return given the expected return of stock, beta, and risk free rate? Example: The expected return of a stock with a beta of 1.2 is 16.2%. Calculate the market risk premium and the market expected return, given a risk-free rate of 3%.Give typing answer with explanation and conclusion Assume that the risk-free rate is 2.5% and the market risk premium is 5%. What is the required rate of return on a stock with a beta of 1.9? Round your answer to one decimal place.suppose a risk free rate is 6% and the market premium is 7%. D1 is 1.25 per share and stock beta is 1.15. What is the required return?
- a. A stock has a beta of 1.2, the expected return on the market is 17 percent, and the risk-free rate is 8 percent. What must the expected return on this stock be?Suppose that you observe the following information in Table 2 for stocks A and B: Table 2 Expected Return (%) 11% Stock Beta A 0.8 B 14% 1.5 The risk-free rate of return is 6% and the expected rate of return on the market index is 12%. Using the Single-Index Model, calculate the alpha of both stocks. Show your calculations. Explain what the alpha of the single-factor model represents and interpret your results.Assume that a stock has a beta of 1.5, the risk free interest rate is 4%,a and the market return is 6%. Find the stock return (expected return).
- b. A stock has an expected return of 14 percent, the risk-free rate is 4 percent, and the market risk premium is 6 percent. What must the beta of this stock be?The risk-free rate is 5.6%, the market risk premium is 8.5%, and the stock’s beta is 2.27. What is the required rate of return on the stock, E(Ri)? Use the CAPM equation.A stock has a required return of 11%, the risk- free is 7%, and the market risk premium is 4%. a. What is the stock's beta? b. If the market risk premium increased to 6%, what would happen to the stock's required rate of return? What would it be? Assume that the risk-free rate and the beta remain unchanged.