Required Rate of Return for Portfolio

Related BrainMass Solutions

• Investing in Market Based Portfolio

  - risk free rate) =6%+1.5*(12%-6%)=15% The expected return on portfolio B of 14% is less than the required rate of return of 15%.

• Finance Problems: Required Rate of Return

  590670 Finance Problems: Required Rate of Return 2. Required Rate of Return AA Industries stock has a beta of 0.8. The risk-free rate is 4% and the expected return on the market is 12%. What is the required rate of return on AA's stock? 10.

• Stock Required Rate of Return

  required rate of return is 12.5 percent.

• Portfolio required return

  required rate of return is 12.5 percent.

• Portfolio to include

  12% which is more than the required return = 10.6 % Add A r B= r f + beta B (r m - r f) Portfolio B risk free rate= r f = 5% beta of stock= beta B= 1.4 return on market portfolio= r m = 13% required

• Calculating Beta - Choices

  What is the portfolio's current required rate of return?

• Capital Budgeting Models

  "The market portfolio is currently generating a rate of return of 15%. You are analyzing portfolio XYZ for which you ve measured the required return to be 18%. Based on this information, which one of the following must be true?

• Comparing your answers to (a) and (c), what do you conclude about the relationship between the required risk premium on a portfolio and the price at which the portfolio will sell?

  The portfolio price is set to equate the expected rate or return with the required rate of return. c.

• Porfolio Risk: Calculating Market Risk Factors

  Portfolio P has a beta of 0.7. d. Portfolio P has a beta of 1.0 and a required return that is equal to the riskless rate, rRF. e. Portfolio P has the same required return as the market (rM).