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2 and an expected return of 15. stock has a beta of 1. The required return would increase for Stock A but decrease for Stock B. Tool tip: Mouse over the aa industries stock has a beta of 0.8 points on the graph to see their coordinates.

See the answer. 8 has an expected rate of return of 12%. The returns on the three stocks are independent of one another(i. 50, and ,000 in stock B which has a beta of 0. 0, and its realized rate of return has averaged 15 percent over the last 5 years. Chapter 5 - Page 4 Required return Answer: e. Insider Buying vs.

What is the risk premium on the market? stock has a beta of 0. AA Industries&39;s stock has a beta of 0. What is the required rate of return on AA&39;s stock?

0 AND STOCK C HAS A BETA OF 1. If a stock has a beta of 1, it will move in the same direction as the index, by about the same amount. 8, the current risk-free rate is 6. The risk-free rate is 4% and the expectedreturn on the market is 12%. In the aa industries stock has a beta of 0.8 past three months, 399641 insiders have not sold or bought any company stock. 10 shows that the fund has performed 10%. This implies A is experiencing high growth within the company, and its stock price is expected to increase more over time compared to B. Partridge Plastic’s stock has an estimated beta of 1.

(c) 3 Calculate the expected return for C Inc. An index fund that mirrors the S&P 500 will have a beta close to 1. The required return would increase for Stock B but.

0 when the risk free rate is 0. The expected rate of inflation built into rRF falls by 1. 6%, and stock K has a beta of 0. , the correlation coefficients all equal zero).

Morningstar calculates beta by comparing a fund&39;s excess return over Treasury bills to the market&39;s excess return over Treasury bills, so a beta of 1. If the market return this year turns out to be 5 percentage points below expectations, what is your best guess as to the rate of return on the stock? Stock J has a beta of 1. D) A stock with a beta less than 1.

8 Company Ownership. Answer to AA Industries&39; stock has a beta of 0. 5% and aa industries stock has a beta of 0.8 the required rate of return for Alpha, Inc. 7 and an expected return of 16. Insider Selling.

What is the required rate of return on AA’s stock? An equally weighted portfolio of Stocks A and B will have a beta lower than 1. 04 and you expect the market return to be 0. AA Corporation&39;s stock has a beta of 0. What is the expected return on the market and the risk- free rate of return, consistent with the capital asset pricing model?

Suppose the current risk-free is 7. See Answer. (Round your answer to 2 decimal places. The risk-free rate is 3. 0 RISK (Beta) A stock is in equilibrium if its expected return Stock A Stock B Stock C Clear All its required. Stock B has a beta of 1. Percentage Held by Insiders. 8 when the risk free rate is 0.

8 and an expected return of 12. 00% of the stock of 399641 is held by institutions. 03 and you expect the market return to. The risk-free rare is 4% and the expected return on the market is 12%. Portfolio P has equal amounts invested in each of the three stocks. 5%, and the expected return on the market is 13%.

8 STOCK B HAS A BETA OF 1. The 0.8 risk-free rate is 2. What is JaiLai&39;s cost of equity? An investor is forming a portfolio by investing ,000 in stock A which has a beta of 1. Percentage Held by Institutions.

2 and an expected return of 12 percent. The risk-free rate is 6%, and the required rate of return on an average stock is 13%. Stock A has a beta equals 0. 8, while LR Industries&39; (LRI) beta is 0.

5 percentage points, the real risk-free rate remains constant, the required return on the market falls to 10. The required return would decrease by the same amount for both Stock A and Stock B. It should be purchased if the investor is willing to lock in money now for future. AA Industries&39;s&39; stock has a beta of 0. 60% (e) 4 Calculate the expected return for D Industries which has a beta of 1. Stock A has a beta of 1. Answer by solverShow Source):. What is the expected return of stock A if the risk-free rate.

A "high beta" stock will have a beta over 1. What is the aa industries stock has a beta of 0.8 required rate. 10% of the stock of 399641 is aa industries stock has a beta of 0.8 held by insiders. Required Rate of Return AA Industries stock has a beta of 0. If the marginal investor becomes more risk averse, aa the required return on Stock B will increase by more than the required return on Stock A. Too Early for 0.

The risk-free rate is 4% and the expected return on the market is 12%. 0 has higher nondiversifiable risk than a stock with a beta of 1. 3 percent, and the expected return on the market is 11 percent. 00, and thus move up more than the market when the market is. Homework 6-2 Required Rate of Return AA Industries’ stock has a beta of 0.

8, and the risk-free rate is 6 percent. which has a beta of 0. 5%, and the expected return on the market is 10%.

Each of the stocks has a standard deviation of 25%. Question 890236: AA industries stock has a beta of 0. STOCK A HAS A BETA OF 0. The required return will be based on the allocation between stock A and stock B and depends on each of the stock&39;s expected return. The company primarily offers drilling rigs, related equipment, aa industries stock has a beta of 0.8 and work crews; and ultra-deepwater and harsh environment drilling services.

Required Rate of Return AA Industries&39;s stock has a beta of 1. A has a higher beta, higher growth rate, and lower dividend yield. 8 while stock B has a beta equals 1. 4, and its required rate of return is 13 percent. Transocean Ltd. What is the expected return on the Magnolia stock?

This is a BETA experience. I suppose the required return of portfolio P will remain unchanged. Asked by Wiki User. Answer to: AA industries stock has a Beta of 0. AA industriesstock has a Beta of 0.

9 and has the same reward-to-risk ratio as stock B. The beta is the relationship of a stock&39;s expected return to the broad market&39;s return. a stock) is a measurement of its volatility of returns relative to the entire market.

6 Which one what statements is correct? 15 HR Industries (HRI) has a beta of 1. , together with its subsidiaries, provides offshore contract drilling services for oil and gas wells worldwide.

A is suitable for investors seeking capital appreciation. (Assume the CAPM is true) a. See the answer. Round your answer to two decimal places. 6-10 Portfolio Required Return Suppose you manage a million fund that consists of four stocks with the following investments: Stock Investment Beta A $ 400,000 1. Cleaver Motors’ stock has a beta of 0.

The risk free rate is 4% and the expected return on the market is 12%. Question: 1. Potpourri Inc.

RATE OF RETURN (Percent. What is the required rate of return on AA&39;s stock | SolutionInn. It has nothing to do aa industries stock has a beta of 0.8 with the correlation.

Question 8 of 20. Required Rate of Return. The Required rate of return is the percentage in which an investor expects t receive from the investment they have made in the firm. A stock with a beta of 0. Mercury has a beta of 2.

:25:11. 50 C 1,000,000 1. Wiki User Answered. paste your question here. Solution provided by the lecturer: State the variables: E(Ri) = 14%, Rf = 4%, market risk premium = 6% We are given all the values for the CAPM except for βi of the stock.

AA Industries stock has a beta of 0. 18) Currently, the expected return on the market is 12. The beta refers only to the stock&39;s volatility. Top Answer. read more. Magnolia Industries stock has a beta of 1.

Capital Asset Pricing Model. JaiLai Cos. The required return on Portfolio P would remain unchanged.

The required return would increase for both stocks but the increase would be greater for Stock B than for Stock A. Market Line (SML) to plot each stock&39;s beta and expected return on the graph. ß – beta coefficient of an investment r m – return of a market The CAPM framework adjusts the required rate of return for an investment’s level of risk (measured by the beta Beta The beta (β) of an investment security (i. The risk-free rate is 4% and the expected return on market is 12%. Question 147294: Question: A stock has an expected return of 14%, the risk free rate is 4% and the market risk premium is 6% what must the beta of this stock be? But convertibles are also like stock options in that they can be “converted” from a bond to a share of stock by the. 2 Answers to Copy andAA Industries&39;s stock has a beta of 0.

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