Question

flashy company stock has a beta of 1.4, the risk free rate is 2.25, and the market risk premium is 7.06. what is the firm's required rate of return. % (to two decimal places)

Answer 1

According to the given information, The firm's required rate of return of Flashy company stock is 12.13%

Required rate of return = Risk free rate + beta × (market risk premium)

Required rate of return = 2.25% + 1.4 × (7.06%)

Required rate of return (RRR) = 12.13%

• The required rate of return (RRR) is the minimal sum that a firm or investor expects to earn from an investment or project.
• The RRR can be used to calculate the return on investment of an investment (ROI).
• Due to varying levels of risk tolerance, each investor's RRR is unique.
• The net present value (NPV) of an investment is obtained by discounting cash flows in order to calculate the RRR.
• The RRR is calculated for equity investments using the capital asset pricing model (CAPM).
• The dividend discount model is a practical computation when assessing stocks that pay dividends.
• In corporate finance, the overall required rate of return will be the weighted average cost of capital when analyzing an investment decision.

Learn more about Required rate of return (RRR), here

https://brainly.com/question/15049289

#SPJ4