1) A stock has a beta of .65, the expected return on the market is 15 percent, a
ID: 2714138 • Letter: 1
Question
1)
A stock has a beta of .65, the expected return on the market is 15 percent, and the risk-free rate is 3.40 percent. What must the expected return on this stock be? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)
2)
A share of stock sells for $46 today. The beta of the stock is 1.1, and the expected return on the market is 14 percent. The stock is expected to pay a dividend of $.90 in one year. If the risk-free rate is 4.5 percent, what should the share price be in one year? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
A stock has a beta of .65, the expected return on the market is 15 percent, and the risk-free rate is 3.40 percent. What must the expected return on this stock be? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)
Explanation / Answer
1. Expected Return=3.4%+.65*15%=13.15%
2.Share Price will be=$54.25
Expected Return 19.90 Share Price pre dividend 55.15 Share Price post dividend 54.25Related Questions
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