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diamong [38]
3 years ago
5

A stock has a beta of 1.28, the expected return on the market is 12 percent, and the risk-free rate is 4.5 percent. What must th

e expected return on this stock be? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Business
1 answer:
Vikentia [17]3 years ago
7 0

Answer:

Expected return on stock =14.1 0%

Explanation:

The Capital Asset pricing Model (CAPM) can be used to determined the expected return on the stock.  

<em>According to the Capital Asset pricing Model the expected return on stock  is dependent on the level of reaction of the the stock to changes in the return on a market portfolio. </em>

These changes are captured as systematic risk. The magnitude by which a stock is affected by systematic risk is measured by beta.  

Under CAPM, Ke= Rf + β(Rm-Rf)  

Rf-risk-free rate (treasury bill rate), β= Beta, Rm= Return on market, Ke-return on stock

Using this model, we can work out the return on stock as follows:

DATA

Ke-?

Rf- 4.5%

β-1.2 8

Rm- 12%

Ke = 4.5% + 1.28× (12-4.5)%=14.1 0%

Expected return on stock =14.1 0%

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Answer:

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Answer:

C

Explanation:

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3 years ago
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Temka [501]

Please the remaining part of the question below :

1.Amount a business earns after paying all expenses and costs associated with its sales and revenues.

2.An examination of an organization’s accounting system and records that adds credibility to financial statements.

3.Principles that determine whether an action is right or wrong.

4.Accounting professionals who provide services to many clients.

5.An accounting area that includes planning future transactions to minimize taxes paid.

Answer:

1.Amount a business earns after paying all expenses and costs associated with its sales and revenues. - Net income (G)

2.An examination of an organization’s accounting system and records that adds credibility to financial statements. - Audit (A)

3.Principles that determine whether an action is right or wrong. - Ethics (C)

4.Accounting professionals who provide services to many clients.- Public accountants (F)

5.An accounting area that includes planning future transactions to minimize taxes paid- Tax accounting (D)

Explanation:

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Answer:

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motikmotik

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To learn more about Work-life Balance here

brainly.com/question/6842800

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