8-1 EXPECTED RETURN A stock's returns have the following distribution:

Calculate the stock's expected return, standard deviation, and coefficient of variation.

8-3 REQUIRED RATE OF RETURN Assume that the 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 0.7?

8-5 BETA AND REQUIRED RATE OF RETURN A stock has a required return of 11%, the risk-free rate is 7%, and the market risk premium is 4%.
a. What is the stock's beta?
b. If the market risk premium increased to 6%, what would happen to the stock's required rate of return? Assume that the risk-free rate and the beta remain unchanged.

8-7 PORTFOLIO REQUIRED RETURN Suppose you are the money manager of a $4 million investment fund. The fund consists of four stocks with the following investments and betas:

If the market's required rate of return is 14% and the risk-free rate is 6%, what is the fund's required rate of return?

8-11 CAPM AND REQUIRED RETURN Calculate the required rate of return for Manning Enterprises assuming that investors expect a 3.5% rate of inflation in the future. The real risk-free rate is 2.5%, and the market risk premium is 6.5%. Manning has a beta of 1.7, and its realized rate of return has averaged 13.5% over the past 5 years.

Required Return, Profitability Index, and NPV. Chapter 7 Practice Problems 16 & 25. 16. ... Should this project be accepted if the required return is 12 percent? ...

... Stock Beta Required rate of return X 1.20 13.64% Y 2.05 19.76% Z 1.65 16.88%. What are the estimated rates of return for the three stocks? Estimated Returns = ( ...

... 2%, new Rf = 1.2%+2% = 3.2% New beta = 1.50 X (1+25%) = 1.875 New required return = 3.2% + 6% X 1.875 = 14.45%. 4. You are given the following returns on "the ...

... The solution provides the stock information for IMB and calculaties the required return using CAPM and the stock price using the constant growth model. ...

... 6) Bond value and changing required returns Midland Utilities has outstanding a bond issue that ... a. Find the value of the bond if the required return is ( 1) 11 ...

... economy leads to a reduced risk aversion, A) firms' betas will increase B) firms' betas will decrease C) investors' required return will decrease D) investors ...

... a. the number of time periods b. the asset's expected cash flows c. the asset's required return d. the asset's terminal value e. none of the above. ...

Stock and Bond value and Preferred stock's required return. ... A12. (Required return for a preferred stock) James River $3.38 preferred is selling for $45.25. ...