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sure tool company is expected to pay a dividend of $2 in the upcoming year. the risk-free rate of return is 4%, and the expected return on the market portfolio is 14%. analysts expect the price of sure tool company shares to be $22 a year from now. the beta of sure tool company's stock is 1.25. the market's required rate of return on sure's stock is

Respuesta :

Market's required rate of return on sure tool company's stock is 16.5%

What is beta in stock market?

Beta is a way of measuring a stock's volatility relative to the overall market volatility.

What is the range of good stock in beta?

For a good stock the "beta" should be below or equal to 1.

Beta less than 1 means the stock is less volatile.

Solution:

⇒ Rate of return on stock = Risk-free rate of return + Beta(Expected return on    market portfolio - risk-free rate of return)

⇒ Rate of return on stock = 4% + 1.25(14% - 4%) = 16.5%

Thus, the market's required rate of return on sure tool company's stock is 16.5%.

To learn more about market return visit the link below

https://brainly.com/question/22587067

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