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How do you calculate the market risk premium?

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Asset beta is 1.10 debt beta 0.25. market risk premium 6 in both the UK and the US. target debt-equity ratio is 4060. pre tax cost 4.5. It is 2.75 in the US.Tax rate 30. What is WACC?

WACC=Re(E/V)+Rd(1-Tc)(D/V) Acording to CAPM Re=Rf+(Rm-Rf)Be Rd=Rf+(Rm-Rf)Bd Also Ba=(D/V)Bd+(E/V)Be Be=[Ba-(D/V)Bd]/(E/V) WACC=[Ba-(D/V)Bd]/(E/V)(E/V)+[Rf+(Rm-Rf)Bd](1-Tc)(D/V

What is another term for market risk?

  another term for market risk is non-diversifiable risk.

Why market risk measurement is important?

Market risk is likely to grow in importance as more and more loans and previously illiquid assets become marketable and as the traditional franchises of commercial banks, insu

How are premiums on life policies calculated?

  Understanding how life insurance premiums are calculated can be quite complicated. In essence, your life insurance rates are based on a number of factors such as your ag

What is forward premium How does the forward market help in reducing currency risk in international business?

Answer   The forward premium arises due to interest differentials between two currencies. In order that the two currencies have the same intrinsic values as they have tod

How do you calculate market risk premium for a firm?

Risk premium = Company's risk (standard deviation of the historical stock returns of the market as a whole) - Risk-free rate of return (standard deviation of the historical tr

Risk free rate is 5 and the market risk premium is 6 What is the expected return for the overall stock market What is the required rate of return on a stock that has a beta of 1.2?

  Expected return= risk free rate + Risk premium   = 11   rate of return on stock= Riskfree rate + beta x( expected market return- risk free rate)
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Why increase in risk premiums?

By McDonald Kang'e Insurance premiums increase because of the following reasons Consumer Price Index (CPI)- to cater for inflation Fraud and Malpractice- These drive the

The market risk premium is measured by?

The market risk premium is measured by the market return less  risk-free rate. You can calculate the market risk premium as market  risk premium is equal to the expected ret