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What is the risk-free rate if the expected return is 20.4 and beta is 1.6 and expected market return is 15?
Wiki User
∙ 15y ago
expected market return = risk free + beta*(market return - risk free) So by putting in values: 20.4 = rf+ 1.6(15-rf) expected market return = risk free + beta*(market return - risk free) So by putting in values: 20.4 = rf+ 1.6(15-rf) where rf = risk free 20.4 - 24 = rf - 1.6rf -3.6 = -0.6rf rf = 6
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∙ 15y ago
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If beta coefficient is 1.4 and the risk free rate is 4.25 and the market risk premium is 5.50 what is the required rate of return?
Require Rate of Return is formulated as: Riskfree Rate + Beta(Risk Premium) Required Rate of Return = 4.25 + 1.4 (5.50) = 11.95%
If the risk-free rate is .06 and expected return on the market is .13. What is the requred rate of return on a stock that has a beta of 7?
49%....in reality no stock has a beta of 7
Risk-free rate is 6 and the expected return on the market is 13 What is the required rate of return on a stock with a beta of 7?
E (return) = Rf + Beta[Rm - Rf] = 6 + (7) (13-6) = 55 %
Assume that the risk free rate is 6 percent and the expected return on the market is 13 percent what is the required rate of return on a stock with a beta of 0.7?
14
What is the beta coeffficient when the the required rate of return is 13.75 the risk free return is 5 and the market risk is7?
13.75= 5 +7(BETA)13.75-5=7BETA8.75/7 = BETA1.25 = BETA
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)
If beta coefficient is 1.4 and the risk free rate is 4.25 and the market risk premium is 5.50 what is the required rate of return?
Require Rate of Return is formulated as: Riskfree Rate + Beta(Risk Premium) Required Rate of Return = 4.25 + 1.4 (5.50) = 11.95%
What is the expected rate of return for Industries that has a beta of 0.71 when the risk free rate is 0.09 and the market rate of return is expected to be 0.13?
11.84%
If the risk-free rate is .06 and expected return on the market is .13. What is the requred rate of return on a stock that has a beta of 7?
49%....in reality no stock has a beta of 7
What does beta measures?
In the world of finance: BETA is a measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole. Beta is used in the capital asset pricing model (CAPM), a model that calculates the expected return of an asset based on its beta and expected market returns.
Risk-free rate is 6 and the expected return on the market is 13 What is the required rate of return on a stock with a beta of 7?
E (return) = Rf + Beta[Rm - Rf] = 6 + (7) (13-6) = 55 %
2 Scenarios If market return is 5 percent stock's expected return is -2 percent If market return is 25 percent expected return is 38 percent What is its beta?
The beta is the relationship of a stock's expected return to the broad market's return. A "high beta" stock will have a beta over 1.00, and thus move up more than the market when the market is advancing, and decline more than the market when the market is declining. A "low beta" stock will decline less than the market, or advance less than the market, depending. The problem with beta is that it assumes a linear relationship, and what you describe here clearly is not. Your stock falls when the market rises a little, and rises more than the market when the market is advancing. To calculate beta, you should look at a longer term analysis of your stock and the market -- say, weekly observations over a year. Most betas are calculated using this length of data. But check formulas -- many different ones are out there. Also remember that beta is only one measure of a stock's performance. Alpha is the performance of a stock that cannot be explained by its beta and the broad market movement. And of course, all of this is a "hypothesis" of market behavior which is useful in understanding broad actions, but very weak in predicting individual stock behavior.
Assume that the risk free rate is 6 percent and the expected return on the market is 13 percent what is the required rate of return on a stock with a beta of 0.7?
14
What will happen to the expected return on a stock with a beta of 1.5 and a market risk premium of 9 percent if the Treasury bill yield increases from 3 percent to 5 percent?
2.0%
The CAPM implies that investors require a higher return to hold highly volatile securities?
The CAPM relates the expected return on a security to that of the overall market portfolio. A highly volatile security will have a high covariance with the market portfolio. Since beta equals the covariance of the security with the market portfolio divided by the variance of the market portfolio, the result is a high value of beta. When this high value of beta is plugged into the CAPM formula, all else not changed, the required return on the security (ra) is going to increase, implying investors require a higher return to hold a highly volatile security. t
What is debt beta?
Beta of a debt is the ration of covariance of the debt return with the market return.If debts are traded then beta of the debt is estimated by regression.
If the beta coefficient is 1.5 and the required rate of return is 14.0 and the risk free rate is 5.0 what is the market return?
.14=.05+1.5(market return-.05) .09=1.5market return-.075 .165/1.5=market return .11 or 11%=market return
