Purchase Solution

expected return on a stock with a beta=2.0 twice

Not what you're looking for?

Ask Custom Question

Is the expected return on a stock with a beta=2.0 twice the expected return on a stock with a beta?

Purchase this Solution
Solution Summary

This solution is comprised of a detailed explanation to answer what is the expected return on a stock with a beta=2.0 twice the expected return on a stock with a beta.

Solution Preview

Is the expected return on a stock with a beta = 2.0 twice the expected return on a stock with a beta?

The expected return on a stock can be determined by Capital Asset Pricing Model (CAPM). The model is as ...

Purchase this Solution
Free BrainMass Quizzes
Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

View More Free Quizzes
Related BrainMass Solutions

  • What does the Beta of a Stock Mean?

    441505 What does the Beta of a Stock Mean? Is the expected return on a stock with a beta=2.0 twice the expected return on a stock with a beta=1.0? No.

  • TF Risk and Return: expected rate of return, market risk, underpriced, volatile,

    a) The expected rate of return on an investment with a beta of 2 is twice as high as the expected rate of return of the market portfolio.

  • SML Fund: required rate of return; should new stock be purchased?

    Assume that Jose Croesact, the fund's president, receives a proposal for a new stock. The investment needed to take a position in the stock is $50 million, it would have an expected return of 15%, and its estimated beta coefficient is 2.0.

  • Risk and Return Problems

    The expected rate of return on an investment with a beta of 2 is twice as high as the expected rate of return of the market portfolio. b.

  • Risk Free Beta Calculations

    PowerShares Global Agricultural Investment Fund is holding a stock with a beta of 2.0 that is currently in equilibrium. The required rate of return on the stock is 15% versus a required return on an average stock of 10%.

  • CAPM, Expected Return, Risk and Return

    The expected rate of return on an investment with a beta of 2 is twice as high as the expected rate of return of the market portfolio.

  • Calculate Stock Beta & Required Rate to Return

    Formula: Required return on stock S= return on risk free asset + beta [expected return on market - return on risk free asset] Answer a Therefore 12% = 5% + beta(10%-5%) Beta = 1.4 Answer b Required return = 5% + 2*(10% - 5%) = 15% The

  • Determining Risk of Stocks

    She wants to invest $40,000 in a stock with a beta of 2.0. After adding the new stock to her existing portfolio, what will the portfolio beta be? Stock Weight Beta Old stock 0.8 1 New Stock 0.2 2 Portfolio beta 1.20 5.

  • Calculating the expected return and beta of a portfolio after buying a new stock

    4694 Expected Return and Beta of Portfolio You have a portfolio with a total value of $9,000 which has an expected return of 12% with a beta of 1.2. You plan to buy $1,000 of a stock with an expected return of 20% and a beta of 2.0.

View More Related Solutions