What would you like to do?
How do you calculate the market risk premium?
What is forward premium How does the forward market help in reducing currency risk in international business?
Answer The forward premium arises due to interest differentials between two currencies. In order that the two currencies have the same intrinsic values as they have tod…ay and avoid interest arbitrage, the premium/discount comes into effect.The forward rate includes the forwrd premium/discount and so the risk of spot market moving in the wrong way is minimised by entering into a forward contract.
If the risk free rate is 10 percent and the market risk premium is 5 percent market determined beta is 1.8 what is the required rate of return?
RoR = Rf + beta x Rp where, RoR = Required Rate of return Rf = Risk free Rate Rp = Risk Premium so Ror - 19%
If beta coefficient is 1.4 and the risk free rate is 4.25 and the market risk premium is 5.50 what is the required rate of return?
Require Rate of Return is formulated as: Riskfree Rate + Beta(Risk Premium) Required Rate of Return = 4.25 + 1.4 (5.50) = 11.95%
If stock beta is 1.2 the risk free rate is 4 and market rate of return is 14 what is the market risk premium?
I'm going to assume that you mean the risk free rate is 4%, or 0.04, and the market rate of return is 14%, or .14. If that is the case, then we solve: Market Rate of R…eturn = (Risk Free Rate) + Beta * (Market Risk Premium) 0.14 = 0.04 + 1.2 * MRP 0.1 = 1.2 * MRP 0.1 / 1.2 = MRP 0.08333... = MRP The Market Risk Premium would be approximately 8.33% This is an example of the Capital Asset Pricing Model, or CAPM.
Risk free rate is 5 and the market risk premium is 6 What is the expected return for the overall stock market What is the required rate of return on a stock that has a beta of 1.2?
Expected return= risk free rate + Risk premium = 11 rate of return on stock= Riskfree rate + beta x( expected market return- risk free rate)
If the required rate of return is 11 the risk free rate is 7 and the market risk premium is 4 what is the beta coefficient?
the beta is 1 the beta is 1
If beta coefficient is 1.4 and the risk free rate is 4.25and the market risk premium is 5.50 what is the required rate of return?
4.25 + 1.4(5.5) = 11.95 = required rate of return the correct answer is: 4.25 + 1.4 (5.50-4.25) = 21.75
Risk premium = Company's risk (standard deviation of the historical stock returns of the market as a whole) - Risk-free rate of return (standard deviation of the historical tr…easury bonds' returns) - Inflation
It is the return you are expected to make by putting your money into Equity(stocks) Over what the current Risk free rate is. For example the Risk free rate (30 YR T-Bonds) is… at 3.8% right now, and I think the S&P 500 is going to return around 8%, so 8 - 3.8 = 4.2% Market Risk Premium. It depends on how you calculate future expected returns and all firms calculate it in different ways.
If beta is 1.8 risk free rate is 5 and expected market risk premium is 12 what is the cost of equity?
5.216 according to CAPM
The current estimated market risk premium of Australia is 8 percent. This is within the regulatory period January 2010 to June 2014.
The market risk premium is measured by the market return less risk-free rate. You can calculate the market risk premium as market risk premium is equal to the expected ret…urn of the market minus the risk-free rate.
In Stock Market
If the required rate of return is 11 the risk free rate is 7 and the market risk premium is 4 If the market risk premium increased to 6 percent what would happen to the stocks required rate of return?
If the required rate of return is 11 the risk free rate is 7 and the market risk premium is 4 If the market risk premium increased to 6 percent what would happen to the stocks… required rate of return?
In Stock Market
Banks are currently using 8% market risk premium. Data as of Feb, 2013.
What is a person trained in mathematics who calculates risk based on loss percentages and determines insurance rates and premiums?
When one has market risk premium he/she is willing to take an financial risk. The risk premium is how much value stocks should return over a risk-free investment. Stocks are c…onsidered a higher financial risk (and possible a faster gain) opposed to, for instance, bonds.
Risk premium is the compensation investors expect to earn in return for taking risks.