Chrome File Edit View History Bookmarks People Window Help 69%E, \"I QE , Sun 7:

Question

Chrome File Edit View History Bookmarks People Window Help 69%E, "I QE , Sun 7:41 PM Hassan Alsaihati D Assignment Results Tulloch Manufacturing Has A Hassan × × c o D ezto.mheducation.com/hm.tpx?todo-postSubmissionview :: Apps UWM-, hotmail A ALEKS MathwayPEX Expedia-CR EagleRider Rentals AT&T; > Pay Onlir at VIP ( DWileyPLUS O su O+ui Principles of Finance 350: Fall 2017-001 HASSAN ALSAIHATI FINANCE Assignment 13 - GRADED instructions I help Score: 4/6 Points 66.67% Question 3 (of 9) Return To Assignment List Award: 0 out of 0.50 points A stock has an expected return of 13.7 percent and a beta of 1.18, and the expected return on the market is 12.7 percent. What must the risk-free rate be? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Risk-free rate eBook &Resources; 26

Explanation / Answer

Expected return=Risk free rate+Beta*(Market rate-Risk free rate)

13.7=Risk free rate+1.18*(12.7-Risk free rate)

13.7=Risk free rate+14.986-1.18Risk free rate

Hence Risk free rate=(14.986-13.7)/(1.18-1)

=7.14%(Approx)

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.