37. The stock of Silvanus Wildlife, Inc., has a beta of 0.91. The market risk pr

Question

37. The stock of Silvanus Wildlife, Inc., has a beta of 0.91. The market risk premium is 8.56 percent and the risk-free rate is 4.71 percent. What is the expected return (in percents) on Silvanus stock?

Part B: The stock of Dagda Lampoonery has a risk premium of 9.16 percent while the inflation rate is 2.73 percent and the risk-free rate is 3.87 percent. What is the expected return (in percents) on this stock?

Part C Eriu owns a portfolio that consists of $8,730 in stock A, $4,496 in stock B, $13,306 in stock C, and $5,909 in stock D. What is the portfolio weight (in percents) of stock D?

Explanation / Answer

37)

Silvanus stock expected return (r) Rf+×Rp Here, Risk free rate of return (Rf) 4.71% Beta of the stock ()                             0.91 Market risk premium (Rp) 8.56% Silvanus stock expected return (r) 12.50% 4.71%+0.91*8.56%

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