1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
AnnyKZ [126]
2 years ago
7

Stock Y has a beta of 1.0 and an expected return of 12.4 percent. Stock Z has a beta of .6 and an expected return of 8.2 percent

.
What would the risk free rate have to be for the two stocks to be correctly priced?
Advanced Placement (AP)
1 answer:
Harlamova29_29 [7]2 years ago
7 0

Answer: 1.9%

Explanation:

First derive the Market return as this is needed in the Capital Asset Pricing Model by using the same model:

Required return = Risk free rate + Beta * ( market return - Risk free rate)

Using stock Y:

12.4% = Risk free rate + 1 * (market return - Risk free rate)

12.4% = Rf + market return - Rf

Market return = 12.4%

Use this to calculate the Risk free rate:

Stock Z:

8.2% = Rf + 0.6 * (12.4% - Rf)

8.2% = Rf + 7.44% - 0.6Rf

Rf - 0.6Rf = 8.2% - 7.44%

0.4Rf = 0.76%

Rf = 0.76% / 0.4

= 1.9%

You might be interested in
write a paragraph describing three senses that circus entertainers rely on explain why it is important
Gala2k [10]
I'm glad you asked because I just watched a video about all the senses(not just five), so hope this helps. :)

Circus Performers rely on many different senses, but here are the most important ones. 

There are way more than five senses and a lot of people don't know that.
 One of the senses they use is equilibrioception. It may sound very brainy, but it's just a big word for balance. Some tightrope walkers use this.

Another sense they use is touch. This is common. All circus performers use this to perform and make their crowd laugh!
 
The last sense is Magnetoception. Another big word with small meaning. This word just means they know the direction they're going to perform.

Circus Performers rely on many different senses, but the most important ones have been stated.
7 0
3 years ago
What part of a cell determines a persons blood type
Zolol [24]

Answer:

Red blood cell ( RBC)

Explanation:

The antigens expressed on the red blood cell determine an individual's blood group. The main two blood groups are called ABO.

5 0
3 years ago
Read 2 more answers
Y = –3x + 6 y = 9 What is the solution to the system of equations?
7nadin3 [17]

Answer:

x= -1

Explain:

Since we know y=9, we can put 9 in for y in the other equation. so we then have 9= -3x+6. We do reverse order of operations and subtract 6 from both sides first and we have 3= -3x. We divide both sides by -3 to get x alone and our final answer is -1=x

5 0
3 years ago
Which of the following is a cultural perspective in which people value individual rights over group needs?
4vir4ik [10]

Answer:

Individualism

Explanation:

The answer is in the alternative, the individual.

7 0
2 years ago
Read 2 more answers
7m 3m 4m 5m find the surface area
lutik1710 [3]
7+3=10 10+4=14 14+5=19

The surface area is 19
5 0
3 years ago
Other questions:
  • the united states supreme court architecture design symbolizees what values that are also shared with greek culture
    12·1 answer
  • What trend are we seeing with glaciers over the last century
    6·1 answer
  • What is the correct similarity statement for the two triangles below?
    11·2 answers
  • TALL,UPRIGHT AND STRAIGHT. What is the answer? Thank you guys.
    15·1 answer
  • The lateral hypothalamus (LH) is the part of the brain that controls the desire to eat. When this
    5·1 answer
  • The titan mission scheduled for 2026 is a reconnaissance to explore the origin of life Options: true or false
    11·1 answer
  • 1. Find the value of the variable x in the equation x + 5.1 = -6.8.
    10·1 answer
  • FREE PIONTS !! !! !!
    14·2 answers
  • Select the correct answer.
    10·1 answer
  • Write a method called roadTrip that (1) accepts as a parameter the diameter of the circular path, and (2) returns the length of
    15·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!