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References
WorksheetSection: 8.1 Bonds and Bond Valuation
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WorksheetSection: 8.1 Bonds and Bond Valuation
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WorksheetSection: 9.2 Estimates of Parameters in the Dividend Discount Model
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WorksheetSection: 9.2 Estimates of Parameters in the Dividend Discount Model
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WorksheetSection: 9.2 Estimates of Parameters in the Dividend Discount Model
7.
Zoom stock has a beta of 1.46. The risk-free rate of return is 3.07 percent and the market rate of return is 11.81 percent. What is the amount of the risk premium on Zoom stock?
8.09%
12.76%
9.59%
10.25%
17.24%
References
Multiple ChoiceSection: 11.9 Relationship between Risk and Expected Return (CAPM)
8.
The risk premium for an individual security is computed by:
multiplying the security’s beta by the market risk premium.
multiplying the security’s beta by the risk-free rate of return.
adding the risk-free rate to the security’s expected return.
dividing the market risk premium by the quantity (1 + Beta).
dividing the market risk premium by the beta of the security.
References
Multiple ChoiceSection: 11.9 Relationship between Risk and Expected Return (CAPM)
9.
The risk-free rate of return is 3.68 percent and the market risk premium is 7.84 percent. What is the expected rate of return on a stock with a beta of 1.32?
9.17%
9.24%
13.12%
14.03%
14.36%
E(r) = .0368 + (1.32 ×.0784) = .1403, or 14.03%
References
Multiple ChoiceSection: 11.9 Relationship between Risk and Expected Return (CAPM)
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WorksheetSection: 13.08 The Weighted Average Cost of Capital
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WorksheetSection: 13.11 Flotation Costs and the Weighted Average Cost of Capital
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WorksheetSection: 13.08 The Weighted Average Cost of Capital
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WorksheetSection: 13.08 The Weighted Average Cost of Capital
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