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]
3 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]3 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
I need help thank youuuu <3
Molodets [167]
I think it’s C, but it could possibly be B
7 0
3 years ago
Read 2 more answers
A shallow lake surrounded by forest in Canada is most likely to be influenced
weqwewe [10]

Answer:

B. seasonal temperature changes

Explanation:

A shallow lake can be dried up in the summer by extreme heat and can freeze over in the winter due to cold. Also I just took this test and this was the answer

3 0
3 years ago
Please help ASAP
wolverine [178]
Based on context clues, I think A is the correct answer.
5 0
4 years ago
Read 2 more answers
Explain the effects of the development of state power from 1450 to 1750
AlekseyPX

Answer:

English people  pushed natives off their lands to grow tobacco

Resistance to Spain's attempt at domination = revolts from the natives (like Pope's rebellion in 1680)

Explanation:

The people of England formed more colonies in America and sought more expansion of their influence abroad. They looked for economic stability by growing Tobacco in the Chesapeake area, and as the cultivation of this cash crop increased, they ended up encroaching the land areas owned by Indians. When the Indians resorted to revolution as a way of resisting further encroachment, the English people prioritized killing Indians or rightly pushing them away from the their lands.

The Pueblo people, known as the Native Americans who lived in the areas known as the New Mexico today stood up against religious persecutions and violence brought upon them by the Spanish people.  The uprising, triggered by these Native Americans was conceived as a way to get back their religious practices, the culture they cherished and the lands they had, which were all removed from them by people of Spain.

3 0
4 years ago
Effects of the revolution of Simón Bolívar.
DENIUS [597]

Answer:

He penned 2 political parties. He liberated three territories, New Granada, Panama,Venezuela & Quito. He liberated Venezuela and later called Bolivia. The region formely known as upper Peru. At age 47 he died due to tuberculosis.

6 0
3 years ago
Other questions:
  • The story is about what steps will lead you to a delicious baguette
    10·1 answer
  • What are the arguements in the Nature vs. Nurture debate? Which side do you think is most influential for behavior? plz need it
    10·1 answer
  • Which influence is stronger—religion's influence on the environment or the environment's influence on religion?
    7·2 answers
  • Many relationships between the individual and society are altered and eventually severed. Identify this theory on aging.
    10·1 answer
  • 1.
    5·1 answer
  • bakit mahalaga na linangin ang mga inaasahang kakayahan at kilos sa panahon ng pagdadalaga at pagbibinata?
    14·1 answer
  • Individuals who suffer from a mental disorder are most likely to commit violent crimes. T or F
    9·2 answers
  • Which of these postsecondary degrees comes after a master's degree (going from lowest to highest)?
    15·2 answers
  • HELP MEEEEEEE (50 points) please anser all quetions
    15·2 answers
  • Identify ONE PIECE of evidence that Duara uses in the passage to support his claim regarding western racial attitudes and Japane
    9·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!