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asambeis [7]
3 years ago
7

A stock has an expected return of 16.1 percent, the risk-free rate is 6.45 percent, and the market risk premium is 7.2 percent.

What must the beta of this stock be
Business
1 answer:
DiKsa [7]3 years ago
4 0

Answer:

the beta of the stock is 1.34

Explanation:

The calculation of the beta of the stock should be

As we know that

Expected rate of return = Risk free rate + beta × market risk premium

16.1 = 6.45% + beta × 7.2%

16.1% - 6.45% = beta × 7.2%

9.65% = beta × 7.2%

So, the beta should be

= 9.65% ÷ 7.2%

= 1.34

Hence, the beta of the stock is 1.34

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Answer: Please see explanation for answer

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or using the code, we have

a) Purchase of land and building - P-I

b) Decrease in accounts receivable - A

c) Issuance of stock - R-F

d) Depreciation expense - A

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i) Purchase of available-for-sale investment - P-I

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l) Loan from bank by signing note - R-F

m) Purchase of equipment using a note - N

n) Increase in inventory - D

o) Issuance of bonds. - R-F

p) Retirement of bonds payable - P-F

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3 years ago
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