Answers12 - d 1 a b c d e Zelo Inc stock has a beta of 1.23...

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d 1. Zelo, Inc. stock has a beta of 1.23. The risk-free rate of return is 4.5 percent and the market rate of return is 10 percent. What is the amount of the risk premium on Zelo stock? a. 4.47 percent b. 5.50 percent c. 5.54 percent d. 6.77 percent e. 12.30 percent d 2. The market has an expected rate of return of 9.8 percent. The long-term government bond is expected to yield 4.5 percent and the U.S. Treasury bill is expected to yield 3.4 percent. The inflation rate is 3.1 percent. What is the market risk premium? a. 2.2 percent b. 3.3 percent c. 5.3 percent d. 6.4 percent e. 6.7 percent d 3. The risk-free rate of return is 4 percent and the market risk premium is 8 percent. What is the expected rate of return on a stock with a beta of 1.28? a. 9.12 percent b. 10.24 percent c. 13.12 percent d. 14.24 percent e. 15.36 percent b 4. Which one of the following stocks is correctly priced if the risk-free rate of return is 2.5 percent and the market risk premium is 8 percent? Stock
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Answers12 - d 1 a b c d e Zelo Inc stock has a beta of 1.23...

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