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.

... expected return on equity also increases the riskiness of those returns. 1. Is it possible to make a reasonably accurate estimate of the required return? ...

Cost of Debt, Required Return, and WACC. See the attached file. ... What required return should Tom use in evaluation of business opportunity being considered ? ...

... 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 = ( ...

Determine the required rate of return for a stock using CAPM. ... Bi (Beta) = 1.5. Ki (Required rate of Return) = 4.6% + (1.5 x 6.4). = 4.6% + 9.6%. = 14.2%. ...

... Dividend yield = Required return growth rate The dividend yield is 3% for both ... b. Market efficiency says that the actual realized returns on all stocks ...

... 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 ...

... Assume that the market risk premium is 5%. What is the expected return on the market? Now use the SML equation to calculate the two companies required returns. ...

... what is the required rate of return on a stock that has a beta of 1.2 ... 1- Security A has an expected return of 7 percent a standard deviation of returns of 35 ...

... The required rate of return on the stock is 15 percent when the required return on the S&P 500 index is 10 percent. ... r = required return on stock A. ...

... Y ear Returns Expected return Deviation 2002 9% 8% 0.01 ... a security which pays a 10 percent annual rate of return. ... How much additional will he either need or have ...