Give me three steps solution and explanation Stock A has a beta of 1.28 and an expected risk premium of 11.54 percent.Stock B has a beta of 1.5 and an expected risk premium of 12 percent. If therisk-free rate is 4.3 percent, what is the stock B's reward-to-risk ratio?8%9.02%5.66%11.54%7.24%12%

To find the reward-to-risk ratio of Stock B, we first need to understand that the reward-to-risk…

Answered: Stock A has a beta of 1.28 and an…

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

See similar textbooks

Similar questions

Stock A has a beta of 1.2, and its required rate of return is 11.00%. Stock B's beta is 0.80. If the risk-free rate is 4.50%, what is the required rate of return on Stock B? (Ch. 8) Group of answer choices 9.45% 7.07% 8.39% 8.83% 7.95%
QUESTION 7: Given the following information: The risk-free rate is 2.5%, the beta of stock A is 1.5, the beta of stock B is 0.78, the expected return on stock A is 11.5%, and the expected return on stock B is 10.5%. Further, we know that stock A is fairly priced and that the betas of stocks A and B are correct. What is the reward-to-risk ratio of stock B? Is stock B fairly priced?
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?
Find the Risk-Free Rate given the Expected Return on Stock Y is 20 %, the Expected Return on Market Portfolio is 24 % and Beta for Stock Y is 0.8. Select one: O a. 4% b. 5% c. 6% d. 7% e. None
Find the Risk-Free Rate given the Expected Return on Stock Y is 20 %, the Expected Return on Market Portfolio is 24 % and Beta for Stock Y is 0.8. Select one: O a. 5% O b. None O c. 6% O d. 4% O e. 7%
1. Stock Y has a beta of 1.2 and an expected return of 11.1 percent. Stock Z has a beta of .8 and an expected return of 7.85 percent. If the risk-free rate is 2.4 percent and the market risk premium is 7.2 percent, the reward-to-risk ratios for stocks Y and Z are ____ and ____ percent, respectively. Since the SML reward-to-risk is ____ percent, Stock Y is ____(undervalued/ overvalued) and Stock Z is ____(undervalued/ overvalued).
Stock A's stock has a beta of 1.30, and its required return is 10.25%. Stock B's beta is 0.80. If the risk-free rate is 4.75%, what is the required rate of return on B's stock? (Hint: First find the market risk premium.) Select the correct answer. a. 8.07% b. 8.19% c. 8.13% d. 8.25% e. 8.31%
The risk-free rate of return is 3.7 percent and the market risk premium is 6.2 percent. What is the expected rate of return on a stock with a beta of 1.21 O a. 10.92 percent O b. 11.40 percent O c. 11.20 percent O d. 12.47 percent
Stock A has a beta of 0.2, and investors expect it to return 3%. Stock B has a beta of 1.8, and investors expect it to return 11%. Use the CAPM to calculate the market risk premium and the expected rate of return on the market. (Enter your answers as a whole percent.) Market risk Premium ______% Expected Market Rate of Return _____%
The risk-free rate of return is 4 percent and the market risk premium is 8 percent. What is the expected rate of return on a stock with a beta of 1.28? a. 9.12 percent b. 10.24 percent c. 13.12 percent d. 14.24 percent e. 5.36 percent
The risk-free rate is 3% and the market risk premium is 9%. If stock A has a beta of -0.9, what is the stock's required rate of return? answer format: show your answer in percent (without the % sign) and to 1 decimal place. For example, 12.56 should be shown as 12.6
Stock A's stock has a beta of 1.25, and its required return is 12.00%. Stock B's beta is 0.90. If the risk-free rate is 4.00%, what is the required rate of return on B's stock? (hint: first find out market risk premium, then apply to find stock B's required rate of return) 8.12% 10.25% 9.12% 9.76% 8.76%

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS

Stock A has a beta of 1.28 and an expected risk premium of 11.54 percent. Stock B has a beta of 1.5 and an expected risk premium of 12 percent. If the risk-free rate is 4.3 percent, what is the stock B's reward-to-risk ratio? 8% 9.02% 5.66% 11.54% 7.24% 12%