We appreciate your visit to Stock XYZ has a beta coefficient of 1 37 If the expected return on the market is 8 and the risk free rate is 1. This page offers clear insights and highlights the essential aspects of the topic. Our goal is to provide a helpful and engaging learning experience. Explore the content and find the answers you need!
Answer :
Final answer:
The risk premium of stock XYZ, when calculated using the Capital Asset Pricing Model, is about 9.59%.
Explanation:
The risk premium for a particular stock can be calculated using its beta coefficient and the Capital Asset Pricing Model (CAPM). The CAPM formula is:
Expected return = Risk-free rate + Beta * (Market return - Risk-free rate)
Given that the beta coefficient is 1.37, the expected return on the market is 8%, and the risk-free rate is 1%, we first calculate the market risk premium, which is:
Market return - Risk-free rate = 8% - 1% = 7%
Therefore, the risk premium associated with the stock XYZ is:
Beta * Market Risk Premium = 1.37 * 7% = 9.59%
Therefore, the risk premium associated with stock XYZ is 9.59%.
Learn more about Risk Premium here:
https://brainly.com/question/28235630
#SPJ11
Thanks for taking the time to read Stock XYZ has a beta coefficient of 1 37 If the expected return on the market is 8 and the risk free rate is 1. We hope the insights shared have been valuable and enhanced your understanding of the topic. Don�t hesitate to browse our website for more informative and engaging content!
- Why do Businesses Exist Why does Starbucks Exist What Service does Starbucks Provide Really what is their product.
- The pattern of numbers below is an arithmetic sequence tex 14 24 34 44 54 ldots tex Which statement describes the recursive function used to..
- Morgan felt the need to streamline Edison Electric What changes did Morgan make.
Rewritten by : Barada
